Ireland-UK Trade – Irish Times Report by ExSite Communications Ltd

IRELAND-UK TRADE Building business relationships between Ireland and the UK

A Special Report by

THE IRISH TIMES Wednesday, February 13th, 2013

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THE STATE OF THE NATIONS Anglo-Irish tradeisprovingresilientalthoughchallenges lieaheadreportsMarkHennessy LONDON CALLING It’sbeenatoughfew yearsbuttheUK’scapitalismanagingto stayonitsfeet.FionaReddanlooksatthe opportunitiesthereforIrishbusinesses CRACKING THE UK WhatIrishcompanies needtoknowaboutexportingtotheUK. AndwhatUKbusinessesshouldknowabout Ireland THE TAOISEACH ON TRADE Arthur BeesleyasksTaoiseachEndaKennythe toughquestions GATHERING FOR ACTION Highlights fromtheannualBritishIrishChamberof Commerceconference WHO ARE THE UK PLAYERS IN IRELAND? JoannaRobertsreportson howIrelandoffersUKcompaniesmore thanjustfamiliarity

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THROUGH THE YEARS AIB’sheadofGB businessGerardO’Keeffetalksabutthebank’s rootsinBritainwhichgobacktwocenturies. GROWING MARKETS Ireland’sfoodand drinksexportstotheUKwereworthalmost ¤38billionlastyear.AlisonHealyreports THE GREEN AT THE CORE Greencore’s PatrickCoveneysaysmostofitssalesare inBritainbutthecompanyisverymuchrun fromDublin

30 32 34 36 38 40 42 44 47

KEEN ON KEENAN. Farmer Duff Burrell talks to Mark Hennessy about how British farmers have had a tough time, LONDON OPENINGS There are opportunities for Irish artists in London, the twin centre of the art world, writes Gemma Tipton THE POWER GENERATION?DickAhlstrom reportsonthepotentialforelectricityexports fromIrelandandasksifit’sacommercial reality. SIZE MATTERS Formanycompanies, growthmeansexpandingtheiroperations beyondthenationalborder WHAT LIES AHEAD FionaReddanlooks attheprognosisfor2013 NORTHERN EXPOSURE FormanycompaniesNorthandSouthcrossbordertradingis thefirststeptoexportingtoothermarkets HORSE TALES SinceGoffsmergedwith DoncasterBloodstocksales,there’sbeena gallopinsales. SOCIAL NETWORK Networking,while importanthere,ismuchmorecrucialinBritain fortechcompanies,writesCiaraO’Brien HOT PROPERTY LondonpresentsopportunitiesforstrugglingIrishpropertycompanies butit’sacompetitivemarket LET’S GET TOGETHER The Gathering could be a game changer for the tourism industry GOOD EDUCATION A London-based teacher’s smart approach to teaching Irish to children. Plus, a listing of the best and biggest trade-related events of the year

EDITOR: Edel Morgan PRODUCTION EDITOR: John Lane CONTACT: Special Reports Department, The Irish Times, Tara St, Dublin 2 TEL: 01-675 8000 E-MAIL: specialreports@irishtimes.com ADVERTISING: 01-675 8585 E-MAIL: advertising@irishtimes.com Every care has been taken in the compilation of this magazine to ensure accuracy at the time of publication. The Irish Times cannot accept responsibility for omissions, or alterations occurring after the guide has been published.

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 5

OVERVIEW

State of the nations Despite the storms of the global economy, Anglo-Irish trade is proving resilient, although challenges lie ahead in 2013, writes Mark Hennessy, London Editor

n statistics, as in life, only the past can be understood, if even then. In the first 10 months of last year trade exports from Ireland to the United Kingdom were up by a billion euros, while imports were broadly static. Given the economic clouds, the result is a creditable one, although the full-year trade figures and, subsequently, those covering imports and exports of services, from the Central Statistics Office have yet to be produced. The figures hide a multitude of stories. For Enterprise Ireland, they show that the 4,000 Irish-owned companies on their list who trade in the British market have done proportionally better. Equally, the numbers show that exports from Irish-located multinational-owned pharmaceutical companies are significantly up, accounting for nearly all of the rise in exports up to October last year, according to Oliver Mangan, chief bond economist at AIB. Most importantly, deep within the figures – the success of companies such as Mainstream, Collen Construction and others – is the evidence that Enterprise Ireland intends in the year ahead to drive home with greater vigour the need to prepare, prepare, prepare. Last year, Enterprise Ireland’s London office spoke to successful companies “to ask what they would do differently, if they were to start again”, says Gavin McWhirter, Enterprise Ireland’s UK manager, Key Market Sectors. “They hadn’t researched enough, they assumed that it was pretty much the same as Ireland,” he went on, “We intend to challenge companies more robustly, more aggressively. In the past we haven’t done that enough, which hasn’t done the companies any favours.”

“It is a strength as well as a weakness,” says McWhirter, “People feel very close culturally to the UK. Populations get on extremely well, broadly understand each other. The Irish watch BBC TV so are in tune with news and current affairs and popular culture, so there is a taking for granted.” The most dangerous opportunity for an Irish company inexperienced in selling to Britain is the “bit of business in Liverpool, or somewhere like that” that turns up unexpectedly, with little, if any effort, he warned. Fired up by the sale, companies believe there is a market in the UK, hire UK staff but carry out no more research: “Two years down the line they have spent £150,000 (¤175k) on a salesman who for the first year promised the earth but didn’t deliver,” he goes on. “That investment doesn’t make it economically viable for them to continue. That is an extreme, but it has happened. People exporting further afield would not dream of just pitching up there and assuming that things were the same,” he says. However, the story of Anglo-Irish trade is broadly a story of success and potential, not disaster. Some 18 per cent of all Irish exports go to the UK, while Ireland imports

“

Ireland produces enough food to feed 36m people, a figure expected to grow to 50m by 2020. The UK consumes more than it produces

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Reaching for the sky: Skyscrapers in the financial district of London. Right: British Prime Minister David Cameron and Taoiseach Enda Kenny

more from the UK than it does from the rest of the EU combined. In 2011, ¤2.5 billion worth of Irish food and beverage was sold to the UK, a fact that would probably not surprise many. However, the sale of ¤2 billion worth of insurance services, ¤4 billion of computer services and ¤2 billion worth of financial services might surprise. Taking up office in 2010, the Conservatives/Liberal Democrats coalition seem genuinely surprised by the importance of Ireland as an economic market, which then appeared ahead of the so-called Brics: Brazil, Russia, India and China. In time, sales to the emerging markets have grown. Today, Ireland remains the UK’s fifth-largest destination for exports mostly oil and fuels, electrical goods,and machinery and equipment. The depth of the ties is illustrated by the interest taken in Ireland by the UK’s biggest 100 companies, who own, or partlyown, between them 771 businesses in the

Republic, points out Steve Aiken, the chief executive of the British Irish Chamber of Commerce. Last year, Taoiseach Enda Kenny signed an economic declaration with British Prime Minister David Cameron, though, in truth, the desire to develop it into something more meaningful is more central to Irish thinking, than it is to No 10. Some interesting changes are afoot deep in the undergrowth. Late last year, Irish and British top civil servants met in the Irish Embassy in London: it was partly “a get to know you”, partly an examination of the areas where co-operation can be progressed. The most obvious area for co-operation lies in energy, particularly with the UK’s need for renewable energy supplies – a need that a succession of Irish firms are working hard to meet, while Dublin and London prepare the legalities to make it work. Despite the controversy caused by the horse-meat debacle, Irish food companies see major room for growth, partly because Irish produce is “almost viewed as regional in the UK, similar to produce from Wales and Scotland”, says Aiken. “Ireland produces enough food to feed 36 million people, a figure expected to grow to 50 million by 2020. The UK has a food deficit. It con-

sumes more food than it produces,” he goes on, “The proportion of food consumed in the UK that is produced in the UK is 60 per cent.” The developing relationship between the countries is best illustrated, perhaps, by Greencore, which is run from Dublin by a 50-strong team led by chief executive, Patrick Coveney, but employs 11,500 people in Britain. “We are also a very significant buyer of Irish food as an ingredient for our business in the UK. We spend about ¤100 million on Irish beef and dairy, principally. The largest providers of beef into our ready-meals, butter, cheese, cream, milk would all be from Ireland,” he said. Even though London’s Olympic days are past, Irish construction firms are still winning business, partly due to the multibillion Crossrail project in London, where companies such as Shay Murtagh have had success. The boom in luxury house and apartment sales offers potential, says McWhirter: “There are some extraordinary figures in the south-east of England

alone. It sounds like a relatively niche area, but, in fact, is worth hundreds of millions, if not more than billions.” Co-operation helps for companies that cannot do everything on their own. Irish firm, Collen Construction joined with a Scottish counterpart, Redpath Construction in Scotland: “It allowed them to move up to a different scale of bidding,” says Enterprise Ireland’s Christine Esson. Equally, engineering is back in favour, as British firms, on the back of “bad experience, or higher transport costs”, become more wary of contracting all of their fabrication work to lowercost countries. For the last few years, companies on both sides of the Irish Sea have coped as best they can with a wider economic climate that they could not control, though Irish exporters enjoyed the blessings of a strengthening sterling.

Today, however, that may be about to change: “Sterling bears watching – it has been stable since last summer between 79c and 83c. But that rise was a flight to safety, rather than because of (the UK’s) underlying attractions,” warns Oliver Mangan of AIB. “Some of the pressure came off sterling because the Euro faced bigger problems, but the more progress that is made to fix the Euro the more sterling will be looked at on its own merits by investors,” he said. Meanwhile, British Prime Minister David Cameron's EU referendum pledge has brought new instability, though for business the fears, perhaps, are less pronounced than they would be if Ireland was in danger of losing its main trading partner in the single currency. Nevertheless, the fears brought could well be done without. Between 2009 and 2013, UK prices increased by 13 per cent. In Ireland, they dropped slightly. In the UK, wages increased by 11 per cent during the period. In Ireland they fell by 3 per cent. In all, UK labour costs in their totality jumped by 15 per cent. In Ireland, they dropped by 11.5 per cent.The UK faces a striking loss of competitiveness – an issue that has begun to exercise the minds of the Bank of England, judging by the tone of recent published minutes of its board’s meetings.

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 7

FINANCIAL SERVICES

City slicker London is showing signs of renewed confidence, but making it there isn’t always easy, writes Fiona Reddan

ondon is still very much a global centre and while the rest of the UK economy might be struggling, the capital is managing to stay on its feet. “While it was very difficult in the past number of years, London is still the premier centre of the world, and as such, an enormous number of decisions are made in London, and through London,and the city is starting to show some signs of renewed confidence,” says Gavin McWhirter, UK manager, key market sectors, at Enterprise Ireland in London. With a “relatively vibrant” economy, Enterprise Ireland is focusing on five sectors in London and the wider UK: construction; engineering and electronics; enterprise software; power, cleantech and renewables; and financial services and business process outsourcing. Indeed while Ireland’s financial-services sector might be in turmoil, it is undoubtedly one of London’s biggest growth sectors. While it may have suffered in recent times in line with the sector globally, is remains nonetheless the world’s biggest centre for foreign-exchange trading, cross-border bank lending and has more international firms than any other financial centre. While the biggest threat to the continued development of the City might be the uncertainty caused by British prime minister David Cameron’s assertion that his party will look for a referendum on whether or not the UK should stay in or out of the European Union, for now it is starting to recover some equilibrium – albeit at a much lower level than pre-crisis. But for Ireland’s law firms, the vibrancy of the City is a big draw. McCann Fitzgerald was one of the first Irish law firms to capitalise on the opportunities the London market offers, when it opened an office there in 1986, ostensibly to serve its then client, aviation leasing giant GPA. Several moves later, the law firm

is now based in the old Nat West Tower, with two full-time partners on the ground, as well as a number of support staff. "Traditionally, Irish firms would have had a financial services bent with regards to operations in London," notes chairman John Cronin, adding that McCann Fitzgerald's office services the "full panopoly of capital markets activities" including loan book sales and restructuring activities. But it's not just financial services that are providing a growth area. The energy sector also presents some opportunities. "There has been quite a considerable interest in wind farms, the sale of state assets, unbundling of utilities. A lot of interest in the energy sector generally,"adds Cronin, who notes that McCann Fitzgerald recently placed a corporate lawyer on the ground in London, with extensive experience in this area. "Making it" in London however, is not as easy as it might appear, despite the plethora of opportunities. "One of the bigger challenges is that it's extremely competitive. From an Irish company's perspective they're likely to encounter a lot more competitors in London, than they would domestically in Ireland," says McWhirter, adding that some find the level of competition "surprising". It's also expensive, although as McWhirter notes, there is assistance available, through outlets such as the London Development Agency. In this respect, McWhirter advises that London might not be the most natural fit for many companies. "It can be very appealing to look at the London market, but there may be stronger cultural connections with other parts of the UK. If geographically London is not so important, then there may be better places for you to start your business," he says. If however, London is where you want to bring your business, then networking can make the transition that little bit easier. If

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the nearest Irish pub offered the chance to find a place to stay, pick up a job or hire staff in days gone by, times have changed. Now, formally established networking organisations are fulfilling that role for experienced professionals, offering introduc-

tions, guidance and support to those looking to break into the London market. The London Irish Construction Network for example, was formed in 2009 by a group of Irish businessmen who are involved in the construction sector in

TRADE

STORIES ColmRoche,Imagist Imagist isa brandingand identityconsultancy I set up in London eightyears ago. We workwith established companiesto reposition and rebrand them but also work with start-upsto createidentities fromscratch. Istarted inpackaging design inCork, which I really enjoyed but aftera coupleof years, and far toomany butter packets, I decidedto move on.I chose London because it’s one of the designcapitals of the world. The

creativecommunity hereis really diverse andinspirational, andthere’s so much visual cultureto absorb– it’s the perfect place to bea designer. Webegan working for asmall number of clientsin Spitalfields, EastLondon, and fromthat we gotour first big contract –with Irish property developer Ballymore –to rebrand the iconic Old Spitalfields Market. Wenow work with international clientssuch asUnilever and Nike.

London is fiercely competitivebut thereare also huge numbersof opportunities. I think beingIrish definitely helpedus

to break intothe market. There isa sense ofa community here amongthe Irish and we are very keen to helpeach other out. Networkssuch as IIBN (Irish InternationalBusiness Network) wouldbe my first port of callif I was starting out again. Idon’t think we’re that differentculturally. I think the main difference is scale. London isa hugeplace but aftera while yourealise thatit’s just a big collectionof small communities. Soit’s not that intimidating.

Clear Currency: Right on the money IT'S NOT JUST ABOUT LONDON: OTHER HOT-SPOTS IN THE UK Manufacturing: Midlands Oil and gas: Scotland and parts of East Anglia Digital media: Manchester, Bristol, Brighton Life sciences: Liverpool, Birmingham, Glasgow Food processing: Leeds, Manchester, southwest

London , while the Irish International Business Network (IIBN) has a broader appeal. It was set up in 2006 to facilitate communication amongst Irish people with a view to identifying and exploiting new business opportunities. It currently has

900 members, spread across three branches in Dublin, New York and London , with membership for the London arm costing £145 a year. According to Fionuala Pender, executive director at IIBN, while the network may have been slow to get going, it has really taken off in line with the recession back in Ireland . "We always had support but it's been different since the recession, as we've been inundated with people from Ireland," she says, noting that membership of the network runs the full gamut, from entrepreneurs and business professionals, to legal advisers, bankers, and venture capitalists. So if Ireland is a difficult environment to grow a business in at present, then a quick trip across the Irish Sea might be your answer.

Threeyearsin,ClearCurrency,a foreignexchangecompanybasedin DublinandLondon,isthriving,helped partlybytheturmoilthathasaffected Irishbankssincetheeconomiccrisis, believesitsfounderBarryO’Neill. Beforesettingupthecompany, O’NeillhadworkedforAnglo-Irish’s treasuryoperationinLondonforthree years.“Treasuryserviceswentdowna gooddegree.Anglocloseditsbusiness inLondonandcustomerswentbackto theirclearingbanks. “Wesawitasanopportunemoment tosetuponourown,”saysO’Neill. “Alotofcorporatesarenotputting alloftheireggsinonebasketany more;iftheycangetabetterforeign exchangerateelsewhere.Inmany caseswearesavingthemasignificant amount:fromhalfto1percent. “Wepurchasethecurrencyinthe inter-bankmarket,asthebanksdo. Butwedon’thavethesameoverheads,”hesays. Thecompany’ssmallestclientbuys ¤50,000-a-monthofforeigncurrenciesforitsoperations,whilethelargest –unnamed,too,becauseofthedanger thatcompetitorswillpoach–buys¤1 millionaday,hesaid. “Wecallexporterswithup-to-date info.Thatgoesdownwellwith customers,becausewearetheireyes andearsonthemarket.Theyrelyon youthen.Managingdirectorsand financedirectorsareextremelybusy people;thetimethattheyhaveto decidetoFXisminimal. Unlikebanks,ClearCurrencycan offercreditfacilitiesonforeignexchangetrades,hesays:“Somehealthy corporatesinIrelandarebeingturned

Clear Currency founder Barry O’Neill

awayforthatbythebanksbutweare abletounderwrite.” Sofar,seven-in-10ofthecompany’s clientsareIrish,aproportionthathas remainedconstantasithasgrown: “WearegrowingtheDublinoffice significantly.Wehopetohave12 peopleworkingforusbytheendofthe year.” ByMarch,O’Neillhopestohavea pre-paiddebitcardavailabletocompaniesandindividuals.“Thatwillsave peopleafortuneonbankcharges.Alot ofUKcompaniesaredoingitalready, butwewillbethefirstinIreland. “Itwouldbeperfectforstudents goingtotheUSforthreemonths,or thosegoingtoAustralia,business travellers,oreventhosewhogo regularlytoPremiershipmatches.I wasstaggeredwhenIsawthose numbers,”hesaid. MARK HENNESSY

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 9

EXPORTS

Cracking the UK Overseas markets are vital to any Irish firm expanding beyond a certain size. Fortunately, vast demand awaits nearby in a place of cultural and commercial similarity, writes Joanna Roberts

or Irish companies thinking about dipping their toe into the export market, a country that shares a common language, a land border, excellent transport links and similar regulatory and legal systems is the obvious place to start. “For indigenous small to medium businesses, the UK is often their only market outside of Ireland,” says John Whelan, chief executive of the Irish Exporters’ Association. “It’s a major industrial and consumer market on our doorstep. There are no visa, transport or language issues. It’s like an extended home market.” He says the most obvious issue for exporters is the fluctuating euro-sterling exchange rate. “The challenge is to protect your margins in terms of rate movement. It has been volatile because of the Bank of England quantitative easing so we’re advising businesses to lock in their exchange rate for as long as possible and lock in a margin.” However, treating the UK market like a bigger Ireland except with a different currency is a mistake many companies make, according to Gavin McWhirter of Enterprise Ireland’s UK office. “It’s a fundamental problem that companies underestimate the differences in the market. You’re at a disadvantage if you think you’ll have the same competitors, can build your network in the same way, and reach your customers in the same way. It’s not a quantum leap, but it is different.” Suzanne Browne, director of baby products company Clevamama, says she found the UK market harder to crack than expected. “We’re exporting seven or eight years now, and the UK market is one of the toughest for us. It’s slow and steady, increasing year on year, but didn’t happen

for us overnight. We were bigger in South Africa initially.” She says there are many different factors in this, including competition for shelf space, onerous procedures and red tape, a price-conscious consumer base, and the longer buying cycles imposed by a larger market. There’s also a difference in business culture. “The approach is very different from dealing with Irish retailers, which surprised me in the beginning because they’re our closest neighbours,” she says. “There’s definitely a more formal approach. They’re more conservative when it comes to business.” Browne says the UK market is based very firmly on products, not personalities. “We’ve probably been given an easier ride from the Irish retailers because they know us. In the UK, they don’t know us. The product is what sells, not who’s behind the product.” Gillian Swain, programme manager with Bord Bia in London agrees. UK retailers, she says, “don’t want to take risks; they want to make sure your product does what you say it will. You need to have a quality product and be close to the market. UK buy-

“

It’s a major industrial and consumer market on our doorstep. There are no visa, transport or language issues. It’s like an extended home market

10 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

ers are under more pressure than they are in the Irish market. I think it's a little bit more formal because of that; you have to set agendas, keep to time, make sure you follow up.” Gavin McWhirter, UK manager for Enterprise Ireland in London, advises Irish companies to rein in the banter until the deal is done. “Some companies can be guilty of informality and a relaxed approach to business meetings,” he says. “It’s not just about getting the right guys in a room and getting on with them. But after the first bit is right – once you've won the contract – they love working with Irish companies and there’s a huge potential to maintain the business.” Differences in behaviour aren’t confined to the conference room. “UK customers are a lot more thrifty and they’ll take the time to shop around,” says Browne. “Take the baby mat. In Ireland during the Celtic Tiger it wasn’t unusual to see one at the top of the stairs and one at the bottom. But some UK retailers wouldn’t stock it because sure you can change a baby on your knee.” A major consumer trend affecting exporters to the UK is the move towards localism. “There’s a noticeable swing back to British branding; companies trying to use

Union Jack on products and trying to support local products,” says John Whelan. “That’s not specifically anti-Irish as it disadvantages all imports, but it’s a trend.” However, the tendency of the British to view Ireland as closer to home than other European countries can be an advantage when competing with imports from elsewhere. Georgia Scott, director of Georgia in Dublin, which sells fashionable rain gear for female cyclists, says, “I’ve had people say to me, ‘Ah you’re only across the water – that’s fine.’ They love it when things are made in the UK but they tend to include Ireland in that too.” How you choose to enter the UK market will depend on your product. For Scott, exporting to the UK happened by chance. “We were approached by a bike shop in London – Velorution – which were exactly the boutiquey kind of shop we wanted. We decided not to go for a main distributor because distribution eats into your margins, and we have a problem enough with that because of the currency.” She says trade fairs are an invaluable way to create a presence and build familiarity with UK buyers. “They like to see you a second or third time because they know you’re in it for the long haul. They like to see you coming out with new things and

Ireland: An ideal first step into the export market

TIPS FOR EXPORTING TO THE UK Get a bank account in sterling so your customers don’t have to worry about euro transactions Set your prices to take account of currency fluctuations Be prepared for hoop-jumping and formal processes Make sure you know why your product differs to those of your competitors Irish charm WILL work, but after you’ve sealed the deal

growing. Now we’re in about 25 stores in the UK. This year, we're going to do things slightly less organically and give it a bit more welly.” John Whelan says that companies looking to adopt a more aggressive approach shouldn’t be daunted by size. “If you can crack a multiple here, you can do it over there. The order sizes are bigger and you may have to comply with things like electronic stocking systems. But you usually wouldn’t go into the market without the capability to scale.” He says companies should also consider the online retail route. “Use the internet to get straight into the British market. Come up with an online sales model and use social media.”

Robert Grisdale (left) and Jack Payne, founders of Grand Scheme Bike Share, with their new Byker (TM) rental system; Georgia Scott and mother and partner Nicola Orriss of Georgia in Dublin; and, left, Suzanne Browne of Clevamama.

However, Suzanne Browne says that while Clevamama invests heavily in its website and social media, it’s not always necessary to have your own e-commerce site. “Online sales is one of our biggest growth areas in the UK. A lot of retailers are gearing towards that. We don’t sell our products online ourselves and retailers like that because you’re not competing with them.” It’s also important to remember that the UK is not a homogenous entity but a collection of different regions, some of which could provide bigger opportunities than others. “The northwest has a huge Irish diaspora in Liverpool and Manchester,” says Gavin McWhirter. “There are also similarities between Ireland and the north of England, for example Yorkshire. “Actually Scotland can be a good place to start. There are cultural affinities: there’s national pride, a storytelling heritage, they’re family-oriented and all about connections. There are fewer competitors. “

Adaptingyourbusinessapproachtosuit thecultureofthemarketyouareinmay begoodadvice,buttherearetimeswhen itcanbeoverdone.RebeccaWardell, deputydirectoroftradeandinvestment attheBritishEmbassyinDublin,says: “Peoplewillsometimesadopt Gaelic phrasesinanefforttobepoliteandto adapttotheculture.Ihavetotellthemit doesn’tgodownwell.” Ingeneral,Wardellsays,theIrish marketholdsnomajorchallengesfor UKcompaniesandis,infact,anideal firststepintotheexportmarket. Differences,wheretheyexist,tendto besubtle:acasual,late-startingappointmenthere,abusinessprecededby protractedconversationaboutsports resultsthere. RobGrisdaleischiefexecutiveofficer ofGrandScheme,aNewcastle-based companythatsetsupbike-sharing schemesthatarecost-effectiveand lightoninfrastructure. Lastyear,itwasawardedacontractto implementabikeschemeatNUIGalway,whichwillbeginnextmonth.“It’s ourfirstcontractoutsidetheUKandit’s asafewaytodiptoesintheinternational market,”hesays.“It’sbeenpretty smoothsofar.” Inparticular,hesays,hefoundthe tenderprocesslessrigidthanathome. “IntheUK,theytrytogeteverythingright firsttime;everything’sintherefromthe beginning.WiththeIrishone,itwasa muchmorefriendlyprocess.Therewere one-to-onediscussionsandworkshops; itwasmuchmoretwo-waythaninthe UK.Ilikeit.Ilikeworkinginpersonrather thansittingatacomputer.” GavinMcWhirterfromEnterprise Ireland’sUKofficesaysthathaving experienceofdetail-driventendering processescouldgiveUKcompaniesa slightadvantageinwinningcontracts. “Irishcompaniesarenotnecessarily asrigorousandcanloseoutinformal processeswhereyouneedtogive evidence,”hesays. McWhirteralsobelievestherecanbe atendencyinIrelandtovalueforeign companiesmorethanIrishones,particularlyinpublicprocurement. AndwhilelearningphrasesintheIrish languagemaybetakingitasteptoofar, UKTradeandInvestment’sDoing Business in Ireland guide doesadvise peopletoboneup. “Meetingsshouldcommencewitha periodofsmalltalk–thisiswhenthe rapportisbuiltandisascrucialaslater discussions.Itisadvisabletohavesome knowledgeofrecentnationalnewsor sportspriortothemeeting.” Joanna Roberts

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 11

AN TAOISEACH

“Investors have confidence in the Irish” Taoiseach Enda Kenny tells Arthur Beesley why trade with the UK is crucial to Ireland’s economic recovery

Trade between Ireland and Britain is central to the economy. What are the main challenges right now? Ireland and the United Kingdom have remained very strong trade partners over the years with growing and critical interdependencies between the two economies. The UK is Ireland’s largest export market, whilst Ireland absorbs a fifth of UK exports. ¤1bn of trade in goods and services flows between the two countries every week, supporting hundreds of thousands of jobs on both sides of the Irish Sea. Fostering and deepening the economic relationship is, therefore, essential to Ireland’s economic recovery and something to which my government is devoting considerable time and resources. Businesses face challenges in this regard, including around competitiveness and the cost of transport, as well as the particular risks involved in trading in a different currency. Irish businesses have restored cost competitiveness over recent years, making our exports better value, and contributing to our export-led recovery. Is there any specific action the Government or the Cameron administration can take to grow

trade between Ireland and Britain? Both Prime Minister Cameron and I are strongly committed to enhancing relations for current and future generations on both islands. This has been reiterated in the Joint Statement we released in March last year, where we identified key areas with the potential to deliver growth, prosperity and jobs across these islands. Since then, there has been an extensive programme of follow-up and implementation, including the commissioning of an independent Joint Economic Study, which is due for completion in March 2013. An important part of the Study is consultation with companies, to help the governments identify where we can best direct our efforts and resources for the maximum return across fundamental sectors of the economy. The outputs from this study will contribute to the evidence base supporting policy development in both countries through highlighting areas for further joint action and closer collaboration. Both Prime minister Cameron and I will have a further opportunity to assess the progress that is being made in this area at our annual meeting in London in March. British banks and retailers were

12 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

badly burned in the Irish crisis. Will that experience curtail British investment in Ireland? I don’t believe it will. The UK’s assistance in providing Ireland with bilateral loans demonstrated the UK’s commitment to Ireland. This helped against further deepening of the crisis which would have been severely felt by both jurisdictions. The Government has worked relentlessly to rebuild Ireland’s international reputation. The high level of interest from international investors in our recent bond issuances provides a clear indication that investors have confidence in the Irish story. I am very optimistic regarding British investment in the Irish economy into the future. Political relations between Ireland and Britain have never been better. However, David Cameron’s push for a referendum on EU membership casts uncertainty over Britain’s place in the union. Does this debate threaten trade between Ireland and Britain? It is, of course, a matter for the Government and the people of the UK to determine their relationship with the European Union, but I personally hope we will see the UK continue to play a full and active part long into the future.

It is a two-way street: the UK benefits from its membership of the EU, and the EU is better off with the UK as an important member making a valued contribution. Also, from a national perspective, having the ability to work together within the Union on the many issues on which we are of like mind – the single market, trade and so on – amplifies the impact of our excellent relationship generally. I don’t think there is a leader that sits around the table at the European Council that thinks that the Union is perfect and couldn’t be improved in any way – if there are things we can do better, let’s look at that and see what needs to be done. But let’s do it in a careful, considered way. As we have grown larger, we have also become more flexible – not everyone is in the euro or participates in Schengen. But we need to ensure that flexibility doesn’t become fragmentation – in designing banking union, we have been careful not to erect barriers between those inside the euro area and those outside. We have also been careful to protect the single market. That must continue to be our approach in the future. We can’t tailor membership to individual demands. However, we can work together for a better stronger union, and that is what I’ll be pressing for.

CONFERENCES

Gathering for action The first annual conference of the British Irish Chamber of Commerce had an impressive line-up of speakers, writes Barry McCall

he first annual conference of the British Irish Chamber of Commerce held in the Aviva Stadium in Dublin on January 24th and 25th attracted a crowd of over 300 people. They heard contributions from ministers from the five governments on the two islands and a host of business leaders (see below right) on the theme of delivering joint business opportunities for Britain and Ireland in 2013. The conference focused on the ¤54 billion trading relationship between the islands and the key business sectors of food and agribusiness; culture, arts, sports and tourism; energy; and small and medium enterprise (SME). The key importance of the SME sector to future economic growth was acknowledged and a means of supporting it was the focus of some debate. An initiative to foster new business talent was also announced. This is the establishment of an Executive Leaders Forum to bring together future leaders from within the chamber membership, both in Britain and here in Ireland. “This will give them a foretaste of working at the non-executive director level with many of Britain and Ireland’s top business leaders and will help develop the future of the chamber as well,” said Steve Aiken, chief executive officer of the chamber. Among the high points of the conference was the signing of the Memorandum of Understanding on Energy between the British and Irish governments. The agreement affirms the two states’ commitment to

maintaining a strong partnership on energy issues, achieving closer integration of electricity markets, and maximising the sustainable use of low carbon renewable energy resources. It will also facilitate the export of Irish wind power to the UK grid. “Trading power with Ireland could increase the amount of green power in our energy mix and potentially bring down costs for UK consumers,” said UK secretary of state for energy and climate change, Edward Davey. “The Memorandum of Understanding marks the continuation of a close working relationship between our governments on the potential for energy trading.” Fergal Naughton of Glen Dimplex, who is president of the chamber, said the signing of the Memorandum of Understanding on Energy was not only a significant step forward for the energy sector but also for relationships between the two islands. “At a time of unprecedented good relations between the two countries, there are also unprecedented risks in terms of economic recession and in terms of trade. And with what’s happening with the UK in Europe, there is a definite gap for the chamber and conferences like this to fill.” The conference concluded with Steve Aiken reaffirming the chamber’s strong support for the UK’s continued membership of the EU. “Having polled our members we believe that Britain’s continued membership within the single European market is vital for all our future plans for investment over the coming years.”

14 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

FIACH Mac CONGHAIL TheAbbey “Myindustryisastrangehybrid.Weworkina parallelrealityasiftherewerenodifferences betweenDublin,Belfast,London,Cardiff, Edinburgh,andsoon.ButweareSMEs aswellandwehavetakentheleadinmany waysinthatsense.Butintermsofculture thereisverylittledifferencebetweenthe twoislands.Therearesomefascinating nuancesthereandwehavelearnedalotfrom Scotlandforexample.WhenTeamScotland goesouttotheworldtheybringculturewith them. “I’mabusinessman,aparliamentarian,and Iworkintheculturalsphereandoneofthe greatthingsabouttheBICCishowitbrings businesses,politiciansandthecultural communitytogethertosupportwhat’s happeninginNorthernIreland.”

ANDY KINSELLA MainstreamRenewablePower “It’softensaidthatBritain’sdifficultyis Ireland’sopportunity.I’dliketoturnthatonits headandpointoutthatourmutualdifficulties representmutualopportunities.The MemorandumofUnderstandingonEnergy signedbetweenthetwogovernmentsatthis conferenceisanexampleofthat.David Cameron’sspeechmayturnouttobeoneof thecleverestmovesbyaBritishpoliticianina longtime.I’vebeendealingwiththeUKfor manyyearsandIhaveneverfoundanestablishmentsoopentodoingbusiness.That makesmebelieveheistryingtodealwiththe EuropeanissueandgivecertaintytoBritain.” NICOLA BYRNE 11890DirectoryEnquiries “AllIheardyesterdaywasthatIhadfiveyears

NICOLA STURGEON “DeputyFirstMinisterScotland AnindependentScotland–befittingofa countrywhosediasporacanbefoundinevery corneroftheworld–willbeoutwardlooking andinternationalist.Ofcourse,ourclosest relationshipswillbethosewithournearest neighboursacrossotherpartsoftheUKand withyou,ourfriendsinIreland. “TheRepublicofIrelandisacountrywith whichwesharemanycommoninterestsand long-standingbonds.Youareoneofourkey tradingpartnersandoursixthlargestinternationalexportmarketwithyearlyexportsclose to£800million.TheScottishgovernment firmlybelievesthatindependencewillenhanceScotland’seconomicandbusiness linkswithIreland;itwillpresentnewopportunitiesforourtwocountriesintermsoftradeand investment;andIhopewillleadtoevercloser co-operationtotheadvantageofbothour peoples.” PAT RABBITTE MinisterforCommunications,energyand naturalresources “ThisisIunderstand,onsomemethodof calculation,thefirstsucheventin98years.It alsohappilyconfirmsanewandfruitful relationshipbetweenourislands.Afterso muchabsorptionintheissuesthathave dividedus,itisappropriatetoconcentrateon whatwehaveincommon. “Specifically,theseislandsareglobally focused,outwardlookingandexport-driven. Wesharecultural,legalandbusinessvalues. Wehaveonelanguageincommon,an occasionaltouringrugbyteamandweareall ofustiedtogetherbyfamily,friendshipsand countlessotherlinks.Britainisstillthemarket offirstresortfornewIrishexporterswhoare tryingtogetafootholdbeforetakingonfurther challengesaroundtheglobe.Similarly,many BritishandIrishcompaniessetupoperations ontheotherisland,notbecauseofgrantsor agenciesandsoforth,butbecauseitmakes businesssensetodoso.”

togetreadyfortheprospectofBritainleaving theEUandthatwecouldhaveborderpostson thewaytoNorthernIrelandagain.Itscaredthe helloutofme. “Thismeanswehavetobuildtherelationshipsbetweenbusinessesonthetwoislands, dotheworkandbepreparedforwhatmight happen.SMEsneedtogetmoreengagedin theprocess.Irelandneedstobeonthebig stageandIrishbusinessesneedtobeinthe twomarkets.It’stimetosaythatBritainisour nearestneighbour,weshareDNAwiththem, andweshouldbedoingbusinesswiththem.” CARWYN JONES WalesFirstMinister “IrelandisWales'secondbiggestexport economy,worth£1.5billion,andcrucialtothe Welsheconomy.WalesandIrelandshould strengthentheirbusinessrelationshiptodrive

recoveryandaccelerategrowth. “We'reveryproudofoursuccessfultrack recordofattractinginwardinvestmentacross sectorssuchasfood,manufacturingand energy.Walesisperfectlylocated–weare closetoIrelandandoffergreataccesstothe UKmarket. “Despitetheextremelychallengingtimes weareexperiencing,Itrulybelievethatby comingtogetherunderthebanneroftheEU andthesinglemarketwewillcomethrough thesestormywaters.Byfocusingon strengtheningthebusinessrelationship betweenourtwonationswecandrive recoveryandaccelerategrowth.” DAVID REDFERN GlaxoSmithKline “ThesinglebiggesttrendIhavewitnessed overthepastfiveyearshasbeentherapid

Clockwise from far left: Fiach Mac Conghail, Nicola Sturgeon, Vince Cable, David Redfern, Nicola Byrne and Carwyn Jones

deteriorationinthecompetitivenessand innovationcapacityoftheEuropeansideofthe business. “Thereareallsortsofreasonsforthatbut thesinglebiggestisprobablytheausterity whichhasresultedinarelativedeclinein governmentspendingonhealthcare.That mightseemagloomypicturebutthereare opportunitiesthereforIrelandandtheIsleson themanufacturingside.Inourbusiness,which issofocusedonquality,thereisahuge opportunitythere.Thelabourdifferentialis diminishingandifIrelandandtheIslescan stayfocusedonqualitythereareopportunities inmanufacturing.”

VINCE CABLE UKBusinessSecretary "Itwouldbecompletelywrongtobelievethat IrelandwouldbenefitifBritainweretotake thatstepandleave[theEuropeanUnion].I thinkitwouldbetheexactoppositebecause youwouldhavegreateruncertaintyaround therelationshipbetweentheUKandIreland, whichcurrentlyrestsonalltheassumptions oftheSingleMarketanditwouldposeparticularproblemsforNorthandSouthofIreland– thingshavegotprogressivelybetterandthe lastthingweneednowistodisruptthat. “Soyoumightconceivablygainopportunisticallyfromanoddinvestorbutthathastobe setasideagainstamuchbiggerlevy.Idon’t wanttodramatisetheproblembecauseIthink atthemomentthereisquiteapositiveoutlook. TheAnglo-Irishrelationshipissignificantly improved,tradeflowshaveimproved,and thereisalotofpotentialforIrelandtobenefit fromthat.”

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 15

INVESTMENT

Next-door trader There are signs that UK investment in Ireland is continuing apace, writes Joanna Roberts

he Irish market has long been one of the most important destinations for many UK businesses, thanks in no small part to geographical proximity and histori-

cal ties. In spite of its relatively small size, Ireland is the UK’s fifth most important trading partner, with 6 per cent of total UK exports coming here. In 2011, the UK exported £16.2 billion (about ¤19 billion) worth of goods to the Irish market, a year-on-year increase of 5 per cent. In some sectors, such as food and drink, and clothing, fashion and footwear, Ireland is the UK’s biggest export market. Ireland is the world’s largest importer of UK food and drink products, with imports in 2011 totalling £3.1 billion (¤3.6 billion). Talk of the UK exiting the EU is potentially damaging. “I don’t think Britain is going to leave the EU,” says Steve Aiken, the British Irish Chamber of Commerce chief executive. “The business community is very determined that the UK should stay in the single market. But now the question has been raised, it’s creating a degree of uncertainty. Our call is very clear: stay engaged with the EU.” Many of the big UK players in Ireland are household names, particularly in the retail sector: Tesco, Marks & Spencer and Boots are a common sight on many Irish high streets. Tesco Ireland alone employs more than 14,000 people in the country and posted a turnover of ¤3.1 billion in 2011. UK companies are also well represented in the financial services sector, with HSBC, Barclays, Experian, Aviva and Standard Life among the biggest names. Other major UK investors include Diageo, GlaxoSmithKline, Scottish & Southern Energy, and Unilever. Despite Ireland’s financial woes and the

wider euro-zone crisis, there are signs that investment by UK companies is continuing apace. In 2012, BSkyB announced the creation of 800 jobs over two years in Dublin, while Aviva announced they were expanding their Galway operations by recruiting 220 people. 2012 also saw smaller UK companies such as Diaceutics (pharmaceuticals), iMosphere (healthcare IT), Envelope Supply Company (manufacturing) and Lafferty Group (publishing) creating jobs in Kilkenny, Dundalk, Westport and Limerick respectively. The benefits of Ireland both as a destination for exports and as a place for UK com-

“

The business community is very determined that the UK should stay in the single market. Our call is very clear: stay engaged with the EU

16 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

panies to expand overseas are clear: a common language, good transport links, a similar regulatory and legal structure, a familiar business environment and EU membership. But Ireland offers UK companies more than just familiarity and convenience, according to Aiken. “ Look at the other FDI companies, the huge number of multinationals here. Ireland is a gateway to North America and to Europe.” The strongest sectors for UK companies are food and agribusiness, energy, banking and regulation and business support services. One company that has already seized the opportunity to invest in Irish infrastructure is UK-based Geo, which specialises in building and running data networks made from optical fibres. Its expansion into the Irish market has taken a more literal form than most with the construction of a new optical fibre under-sea loop linking Dublin to Holyhead. This new facility, which went live in December 2012, provides Irish companies with a secure and resilient data connection between Ireland and the UK. Typical users of Geo’s infrastructure include mobile operators, online companies, financial institutions and large data centres. Chris Smedley, the company’s ceo, says the abundance of such businesses in Dublin was a key factor behind the decision to invest in the subsea route. “Dublin has established itself as a very attractive market for ICT and online players. There’s an attractive corporation tax rate, a skilled but not expensive labour force, and it’s an attractive location for data centres because of the natural cooling effect of the climate. “I was struck by how much of a realisation there is in Ireland of the importance of

TRADE

STORIES JulianSollom,FounderStoryBrands After25years workinginthe drinksindustryin theUK,Isetupmy owndrinkscompanyin2011.Wemake lightlysparkling naturalfruit presses,ablendof fruitjuicesand sparklingnatural springwater. Inourfirstyear wesoldhalfa millionbottlesinthe UKandhavebegun exportinginseven exportmarkets, includingThailand, HongKongand Burma.Mostofthat businesscameasa resultofenquiries.It waswhileIwas standinginahotelinHongKongitoccurred tometowonderwhyIwasoutheretrying toselldrinkswhenIhadn’tevenapproachedtheIrishmarketyet?

Richard Barnwell, founder of game development firm Digit. “We’re creating new technology, new IP and new jobs”

the UK as an adjacent market, which I don’t think has always been the case.” If ConnectIreland has its way, such success stories will become more common. The organisation was set up in March 2012 as part of the government’s “Succeed in Ireland” initiative, with the aim of using the Irish diaspora as a means to identify new sources of inward investment. Its objective is to bring 5,000 jobs to Ireland within the next five years. Individuals register as “connectors” and alert ConnectIreland if they become aware that a company is considering overseas expansion. ConnectIreland then contacts the company with the aim of persuading them to invest in Ireland. Should this happen, the original connector receives ¤1,500 for each job created, up to a maximum of ¤150,000. The UK currently has the third-largest number of registered connectors, with about 500 (Ireland is number one and the US number two). In total, 76 UK companies have been identified as being on the target list, although of the three companies that have so far made the move to Ireland – and created 70 jobs in the process – none are from the UK.

Therearemany reasonswhythe Irishmarketwasthe logicalfirststep.Our drinksarevery suitedtothepub tradeandtheIrish andUKpubtrades aremorealikethan thoseofanyother country.Ontopof thatyouhaveallthe obviousadvantages, suchastheshared languageandthe factthatwehavea tradinghistorygoing backaeons. ConsequentlyI tookpartinaUK tradedelegationto IrelandinSeptemberand,onfootof that,amcurrentlyin veryactivenegotiationswhich,Ihope,will see2013astheyearIbeginexportingto Irelandtoo–particularlyasmymotherisa HickiefromDublin.

For some, the benefits of operating on this side of the Irish Sea become most apparent when there’s a stark choice between the UK and Ireland. Richard Barnwell is the founder of Digit, a game development company he set up last year. “Initially the plan was to set up in the UK; I’d already started the process and was looking for premises. “However, we started talking to a few people in Ireland, specifically in the investment scene and Enterprise Ireland. We started to realise there may well be an opportunity to consider opening the company in Ireland as an Irish company. “Since we launched in May 2012 we’ve created over 20 high-level jobs, with plans to dramatically increase that in 2013. We’re creating new technology, new IP and new jobs. We also created a new incubator inside our offices which houses two smaller Irish games startups.” He says some of the key factors in his decision were an open culture, an exceptional standard of graduates, opportunity to influence the games industry, start-up friendly tax structures and a good global outlook. However, there is a downside. “The main disadvantage is purely down to the country’s size. There are not enough people to fill the jobs. Although we always try and hire Irish based first (we’re 75 per cent Irish), for certain roles we have to go elsewhere. I hope this will change.”

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 17

COMMERCIAL PROFILE

“

Centuries of success across the water

93 per cent of customers expressed strong satisfaction with the bank and more than two-thirds said they would recommend Allied Irish to others

Allied Irish Bank (GB) has levels of customer satisfaction that other banks can only dream of. Head of GB Business Gerard O’Keeffe reveals the secrets of the bank’s success

llied Irish Bank’s strong position in the UK market is grounded in a history that goes back almost two centuries. “Our roots in Britain go all the way back to 1825,” says head of GB Business with Allied Irish Bank (GB) Gerard O’Keeffe. “But it has really been since the 1970s that we have grown and developed into what we are today. We were in Britain back then when a significant number of Irish people were coming over here to do business and we grew with that community opening branches in areas like Kilburn in North London and later in the major cities around Britain.” Over the years, it developed into a niche business bank primarily serving the British-Irish business community. “We developed a reputation for being approachable, for having a can-do attitude and being a good bank to do business with, ” says O’Keeffe. “Over time we started doing business not only with Irish companies coming into Britain, but also with the companies they were trading with. We were voted Britain’s Best Business Bank on a number of occasions as a result of the reputation we earned for ourselves back then.” The economic downturn brought this growth to a temporary halt. “I think you could say we went into hibernation for a few years, but we have been very much open for business again for the past year or so. However, we kept our customer base intact during that period and surveys

carried out on our behalf by Brunswick Research indicate extremely high levels of customer satisfaction.” Indeed, 93 per cent of customers expressed strong satisfaction with the bank and more than two-thirds said they would recommend Allied Irish to others, while half of those had already done so. These results are well ahead of banking industry averages and are reflected in the bank’s shortlisting for Business Bank of the Year and Best Service from a Business Bank in the 2013 Business Moneyfacts Awards. It took the Best Business Fixed Account Provider Award last year. O’Keeffe attributes this success to a combination of exceptional service and a full range of business products. “We have 21 branches around Britain and all of them have very experienced managers and staff,” he says. “There is a lot of autonomy in our

18 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

Gerard O’Keeffe, head of GB Business with Allied Irish Bank (GB): “Irish people have a very good business reputation, people like doing business with us” branches and the staff have built up relationships with their customers over a long number of years. It’s not like the volume banking service of a high street bank – the quality of service we offer is more traditionally associated with corporate banking.” He also believes it is due to the strong representation of Irish people among the staff. “We have a very good mix of Irish and British staff,” he says. “Irish people have a very good business reputation, people like doing business with us. We have a genuine passion for customer service and we make sure things are done properly. We go the extra mile to help our

customers and that is very much appreciated – the service mentality is in our DNA. And we need this, we have to be better than our competitors to succeed – and we are.” The bank’s role in supporting the Irish economy through its promotion of the trading relationship with Britain is also important. “Britain is Ireland’s single biggest trading partner by far,” says O’Keeffe. “For example, there are more Irish directors of companies in Britain than any other overseas nationality. It is useful for Irish companies looking to expand into Britain to have Allied Irish there. For instance, if an Irish firm wants to start doing business in Manchester they can go to our branch manager there and be introduced to the local business community and helped make the contacts they need to get off to a good start.” In many ways, the bank’s branch network acts as a free support service for Irish business in Britain . “It also works in the other direction. The vast majority of first- and second- generation Irish businesses here in Britain want to do their bit to help Ireland. We are helping them do business in Ireland in areas like sourcing raw materials and other supplies from Irish companies. “We are also very active in promoting cross-Border trade on the island of Ireland through our First Trust Bank in Northern Ireland.” The bank has established a dedicated British Irish Trade Desk to support this activity. “We want to facilitate and promote business between the two countries. The British Irish Trade Desk co-ordinates our activities in that regard and every branch has a staff member dedicated to working on British Irish trade. This helps British firms do business in Ireland and assists Irish firms coming here. We offer the full range of banking services and we put our market knowledge and linkages at the service of our customers.”

Energy Bridge A once in a lifetime opportunity Mainstream Renewable Power is leading the revolutionary Energy Bridge which will see Ireland exporting 5,000MW of surplus wind energy to the UK starting from 2017. For Ireland, Energy Bridge means 2.5 billion euro each year in export revenues for 25 years as well as the potential to create thousands of jobs in development, construction, operations, maintenance and manufacturing. It will generate 34 million euro every year in council rates and 12 million euro each year in tax revenues. We have a team of more than 170 experienced staff dedicated to wind farm development, construction, ďŹ nance and transmission. This is a once in a lifetime opportunity for Ireland. And we are committed to making it happen.

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Making it happen

COMMERCIAL PROFILE

Relationships that are built to last Allied Irish Bank (GB)’s long-standing partnerships with Carey Group and Powerday have allowed the UK firms to grow from small beginnings into major companies

Jason Carey, Operations Director at Carey Group

CAREYGROUP

One of Allied Irish Bank (GB)’s longest standing customers in the UK is Carey Group. The company was established in 1969 in North London as a groundworks contractor by Careys’ Chairman John Carey Snr and his two brothers Pat and Tom.AccordingtoJohnCarey,theyhada single vision – to build an exceptional construction business which delivered on its promises and produced quality works safely, whilst not losing sight of theirstrongpersonalethicsandvalues. Forty two years on and the Carey Group is still a family business with the secondgenerationofCareysnowcoming to the forefront, as John Jnr, Tommy and JasonCareyhaveallworkedtheirwayup

to become directors within the company; which operates across the UK and Ireland.Civilengineeringisstillverymuchat the heart of the business, but the group has expanded its areas of expertise to include demolition, house building, waste management and the construction of majorconcretestructures. “One decision which has stood the test of time was the appointment of Allied Irish as our bankers,” says John Carey. “They have supported us for over 40

years, through good and difficult times. They have provided us with expert advice during that time, which has been invaluable to the growth and stability of Careys. We are also very proud to have playedamajorroleinthedevelopmentof the roads and infrastructure of Milton Keynes for the Milton Keynes DevelopmentAgency. “From our first contract in the early 1980swerecognisedthattherewasenormous potential for us to expand our in-

POWERDAY

Next time you see London Irish play in an English Premiership rugby match or possibly in a future Heineken or Amlin Cup fixture, you’ll see the name Powerday proudly emblazoned across their shirts. The name may not mean much in Ireland, but it is a very Irish companyindeed. Powerday is a family owned recycling and waste management company founded in 1980 by Irishman Mick Crossan.Itownsandoperatesthelargest materials recycling facility in southern England and one of the biggest stocks of skips in London. Using the latest technology to recycle and recover as much as possible, it provides an alternative to landfill, delivering 100 per cent recovery from waste to customers acrossLondonandbeyond. “The firm was originally started by Mick Crossan’s father back in the late 1970s as a labour hire company and gradually expanded into plant and skip hire”, explains sales and marketing director Simon Little. “Since then, Mick Crossan has taken the business and completely transformed it into a waste management firm. We generate high

quality recyclables and renewable fuels and provide innovative, environmentally responsible and customer focused recyclingandwastemanagementsolutions.” While maintaining an environmentally responsible approach, the firm has grownsignificantly, doublingin sizein the past three years and increasing turnover from £12 million to £35 million over the pastfiveandnowemploys200people. “We are long-standing clients of Allied Irish Bank (GB) and they have been very supportive of us as we have grown the

20 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

Powerday boss Mick Crossan

business through Mick Crossan’s investmentovertheyears,”saysLittle. “We have a very strong belief in responsibility to the environment and our local community and have invested very significantly in plant and equipment to maximise recycling and produce a fuel for energy recovery from residual waste,” says Little. “We also ensure traceability with virtually all materials remainingintheUK.”

volvement there. Our attention to detail and the quality of our service was subsequentlyrecognised,andwehavebeenrewardedwithrepeatbusinesscontractsin MiltonKeynesforover30years.” Thecompanyhasalsodevelopedlongstandingrelationshipswithmanyleading UK retailers, including Ikea, Tesco, Asda and Sainsbury’s. “We won our first contract with Sainsbury’s back in 1989 and havesincegoneontodeliverover400civilengineeringanddemolitionprojects.” Carey attributes much of the company’ssuccesstothequalityanddedication ofitsemployeesandconstructionteams. “We recruit talented people and invest significantly in the development of their talents and skills, providing them with challenging and rewarding careers,” he points out. “In return, many of them dedicate their entire careers to Careys. “Wealsoplacegreatvalueonthedevelopment of strong business relationships with companies who have inherent businessethicsandfocusondeliveringaquality service. “We appreciate the support and loyalty of Allied Irish over the many years we have worked together and are looking forward to continuing our relationshipwiththeminthefuture.”

Thecompanyalsousesenvironmentally responsible transport links. Its current main site in Willesden in North London sits on a 26-mile lock-free section of the Grand Union Canal between Camden and Slough and is situated at a key railway junction and has its own sidings, enablingittotransportmaterialsthroughouttheUKusingtherailnetwork. “We are proposing to develop a new state-of-the-art materials recovery facility at the former railway sidings known as the Old Coal Depot off Tavistock Road in West Drayton which will handle up to 950,000 tonnes of west London’s waste material per year,” Little says. The company is very proud of its Irish links and its sponsorship of our rugby exiles. “The company sponsors London Irish all the way up from the under-six junior teams to the senior professional team. We became principal sponsor of the club in 2011 in a three year deal having supported the amateur club and the hugely successful academy over many years.ThisispartofPowerday’sandMick Crossan’s way of giving something back tothecommunity.”

Energy for a sustainable future The Irish and British electricity markets are converging, creating challenges and opportunities for all. ESB is at the forefront of this transformation bringing sustainable and competitive energy solutions to all our customers. www.esb.ie

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FOOD

Growing markets Irish food and drink exports to the UK were worth almost ¤3.8 billion last year. That’s a lot of beef, pizza and Cheestrings, writes Alison Healy

ur island status may be a major downside when it comes to exporting our food and drink but if we had to choose an ideal customer on our doorstep, Britain would tick all the boxes. The UK food and drink market is the world’s ninthlargest grocery market and the fourth-largest European market. And it looks across the Irish Sea for a lot of its produce. We are the third-biggest food and drink exporter to the UK after the Netherlands and France. Last year, our food and drink exports to the UK were worth almost ¤3.8 billion, compared with ¤3.5 billion in 2011 and ¤3.3 billion in 2010. This market now accounts for 42 per cent of our food and drink exports. But this trade moves both ways and Ireland is the most important export market for food and drink from Britain. We take more than ¤2 billion worth of its food and drink every year. Bord Bia’s director of markets, Michael Murphy, says the food industries of both countries have become increasingly intertwined in recent years with companies such as Tesco, Marks & Spencer, Iceland and Compass having a major presence on both sides of the Irish Sea. Many food manufacturers also have plants and subsidiaries in both countries. So what were our star performing foods in the UK last year? The biggest success stories involved beef, seafood and dairy produce, but pig meat and horticulture also did well. Irish dairy exports topped the league in terms of value last year. Dairy products and ingredients generated ¤960 million, which

was a 5 per cent increase compared with 2011. Cheese was the strongest performer in the dairy category, with products such as Cheestrings faring particularly well. More than half of Irish beef exports, or 230,000 tonnes, went to the UK last year and were worth ¤910 million. Ireland has maintained its position as the leading beef supplier to the UK market, with a 60 per cent share of total imports. The UK market is still our single biggest destination for prepared foods, taking 40 per cent of processed products such as pizzas, snacks, confectionery and bakery products. According to Bord Bia, last year was a difficult year for this sector in Britain with ongoing price pressure and strong competition but the strengthening of sterling against the euro helped exports in the latter half of the year. Murphy said snacks and pizzas did particularly well in Britain with pizza exports up by 10 per cent for the first 10 months of the year. So, while total ready-meal sales in the UK suffered last year, Irish exports actually gained market share. The UK took 43 per cent of our pig meat last year and again we increased our market share. Shipments rose by more than

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More than half of Irish beef exports, or 230,000 tonnes, went to the UK last year and were worth ¤910 million

22 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

The UK market now accounts for 42 per cent of Irish food and drink exports, with dairy exports topping the league in terms of value last year 6 per cent to 78,000 tonnes and they produced 265 million worth of trade. Our nearest neighbour took almost 85 per cent of our poultry exports last year, resulting in business worth ¤175 million. Sheep meat exports to the UK increased last year to reach 11,000 tonnes and were worth about ¤40 million. The UK also takes the majority of our live cattle and sheep exports, and this trade

was worth ¤170 million last year. Our share of seafood exports destined for the UK also increased, accounting for ¤70 million, with sectors such as shellfish and oysters doing well. There was a growing interest in Irish mushrooms abroad last year with the UK market growing by 4 per cent both in value and volume. Brown mushrooms and value packs of mushrooms showed the greatest growth. It was a tougher year on the drinks front with strong competition and economic pressures. Nevertheless, the UK was still our biggest customer in this sector, accounting for 35 per cent of total drink ex-

HUNGRY FOR GROWTH: HOW RUMBLERS ATE INTO THE UK MARKET

ports. The beverage sector exported drinks worth ¤435 million to the UK last year. The best-performing drinks were cream liqueurs, whiskey and non-alcoholic beverages such as mineral water. However, cider suffered due to increased competition and the poor summer weather. Looking ahead, this year is expected to be challenging in the UK because of the economic climate but Murphy says long-term growth prospects remain positive. He singles out meat, dairy and seafood as having the greatest potential. "We also expect to see some potential growth in prepared foods," he says. "Overall I would expect exports to the UK to continue to grow."

IRISH EXPORTS TO THE UK 2012 Dairy: ¤960m Beef: ¤910m Prepared food: ¤540m Drinks: ¤435m Edible horticulture and cereals: ¤220m Pig meat: ¤265m Poultry: ¤175m Livestock: ¤170m Seafood: ¤70m Sheep meat: ¤40m

ForIrishfoodcompanies,theUKisoftenthe firstportofcall:itsretailfoodmarket of £100 billiondwarfstheRepublic’s ¤8 billionmarket. “It’sasignificantopportunity.Justtoget onelistingintheUKcandoubletheturnover ofacompanyovernight,”saysMichelle Butler,managerforBritishandIrishmarkets withBordBia. ButgettingalistinginaUKsupermarketis noguaranteeofsuccess.TakeRumblers,an on-the-gosnackproductfromDonegal Creameries. ItfirstenteredtheUKmarketin1998, whenitwasstockedontheshelvesofTesco. AmarketingcampaignwithCoronation Street followed,butaccordingtoSheila GilroyCollins,Rumblers’salesandmarketingmanager,successdidn’tfollownaturally. “Thedifficultyintheearlydayswasthat [Rumblers]didn’thavethebreadthof distributionithasnow,”shesays,addingthat togetrecognitiontheproductneededwould haverequireda“prohibitive”investmentin marketing. “Alisting,whileitisagreatachievement,is justthestartoftheactualwork.You’re competingeveryday,withnewproduct launcheseveryday.Snackingtrendscontinuetochangeregularly,”shesays. SotherelationshipwithTescocametoan end–butitwasn’ttheendofRumblersinthe UK. Fifteenyearsonandit’saverydifferent storyfortheproductthere.Rumblersis stockedthroughoutthecountry,withnationallistingsinCo-op,BootsandMorrisons– andsinceSeptemberlastyeartheyhave beenbackontheshelvesofTesco.TheUK marketnowaccountsfor95percentofsales ofRumblers –nosurprisegiventhesizeof thepopulation. “Distributionismucheasier,asthereisa smallerareatocoverintermsofsizeof population,andit’smuchmoredevelopedin termsofcentraldistribution,”saysGilroy Collins,addingthat,forRumblers,amajor stepinenablingittogrowintheUKwasthe adventofsocialmedia. “Thebiggestchallengeforuswasthe marketingoftheproductin theUK.Beforesocial mediaitwasalot morechallengingfor asmallercompanyto compete,butonline marketingmakesit mucheasierfora companyto positionitself. It’smore cost-effective and allowsmore targetedtalkto

Sheila Gilroy Collins: “You’re competing every day, with . . . launches every day”

consumers,”shesays. Sohowtoensuresuccess?ForButlerit comesdowntoafewkeypoints.“Haveatrue USP”–uniquesellingpoint–“understandthe costofsupplyanddistribution;andremember,you’renotjustsellingaproduct:you’re sellingaservice,andyouhavetodemonstratethat.” And,remember,itisaverycompetitive market.“IntheUK,buyersareveryreluctant totaketheriskoftakingonanewsupplier, particularlywhenit’sjustaboutstealing salesfromacompetitor.That’sjustaraceto thebottom,andit’snotaddingsomethingto theircategory,”saysButler.“Itneedstobe somethingnewanddifferent.” Distributionmodelscanalsoworkforor againstyou.Optingforsmaller,specialist foodstorescanmitigatetheneedforan expensivemarketingcampaign,butitbrings itsownchallenges. “Therearechallengesingoingtothe premiumfoodhalls;volumesaresosmall thatyoucannotgeteconomiesofscaleto makethelogisticswork,”saysButler. Butperhapsthebiggestadvantageofthe UKmarketliesinitssimilaritytotheRepublic’s.“Inalotofwaysit’svery,verysimilar,as fromaconsumerperspectivetrendstendto bequitesimilarinourparticularcategory,”saysGilroy Collins,addingthatIrish companieslookingto entertheUKmarket shouldtalktoother Irishcompanies, which,shesays,are “verysupportive of othercompaniestryingto penetratenew markets”. Fiona Reddan

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 23

INTERVIEW

The green at the core Most of its sales are in Britain, as are most of its people and its factories. Yet Greencore, under Patrick Coveney, is very much run from Dublin, writes Mark Hennessy, London Editor

atrick Coveney, the chief executive of Greencore, can tell every mark on the floors of the arrivals and departures halls of most British airports. They are as familiar as home to someone who spends up to three days of every week in Britain. Travel is important. The company is run from a business park in Santry, convenient for Dublin Airport: “Dublin – and this might surprise you – is a pretty convenient location from which to run a fragmented set of assets in the UK. “You can fly to everywhere, second only to London. It is networked into the UK: Nottingham, Newcastle, Leeds, Bristol, Birmingham, plus London. I am in all of those airports probably once a month,” he says, nursing a winter cold in a London hotel. Just 50 people work in Santry, directing the operations of 11,500 others throughout Britain, and, increasingly, in the US. “Our team runs the business from Dublin and our board is based there. Two out of three of our executive directors are based there.” Two years ago, Greencore and Coveney’s ambitions suffered a major blow when a bid to buy Northern Foods was thwarted, but recovery has come since Greencore bought Uniq, a food company that grew out of the Unigate dairy. Purchased for £130 million (¤151 million), Uniq has “added about 40 per cent to our business”, says Coveney. In addition to its desserts and salads operations, the deal brought with it the contract to supply Marks & Spencer with sandwiches. Greencore supplies 400 million sand-

wiches every year and M&S is its biggest customer. It also supplies to Sainsbury’s, Tesco, Asda, the Co-Op and Morrisons; and in addition to sandwiches it provides panini, sushi and ready-meals. “We would be much less known than other large food companies with large operations in Britain because everything we sell is under the brand names of our customers. It is all private-label food,” he says. “If you buy a ready-meal in Tesco, a sandwich in Marks & Spencer or Sainsbury’s, or a cake in pretty much any retailer in the UK, there is a pretty good chance that we made it,” he says. Every week, 20 million people eat Greencore’s wares. Bereft of once monopolistic profits generated by Irish sugar, Greencore, which is now listed on the London Stock Exchange, is now bigger than it was before the EU reform, but only about ¤60 million worth of its business comes from Ireland. More than ¤1.2 billion of its revenues are generated in Britain. “We have a more modern company than we would have had, but sugar was a very good business for a very long time; as most monopoly businesses are, by the way,” says Coveney. Once the decision was made to end sugar production, other sell-offs in Ireland had to happen, he says. “We had a whole series of other businesses that hung off the fact that we had a sugar business, including specialist sugar machinery, feed, fertiliser operations.” The road to life after sugar had begun well before the closure of the Carlow and Mallow sugar factories, with the purchase of Hazlewood Foods, the foundation today

24 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

for the company’s British business. This happened in 2001, before Coveney moved to Greencore from McKinsey. Today, Greencore buys approximately ¤100m of Irish beef and dairy to include in its UK-manufactured and sold products: “We are a very significant buyer of Irish food as ingredients for our business in the UK. Butter, cheese, cream and milk would all be from Ireland.” “That is something that is actually increasing as we have grown,” he says, add-

ing that often raw ingredients are shipped from Ireland, processed in the UK and then shipped back to Ireland for consumption as finished foods. However, the rigours of the ready-meals market make Irish production impossible: “All our products are short shelf-life, fresh product. In Warrington we have one of the largest ready-made factories in Britain. Each of the company’s British plants is a specialist: one produces the salads, another the sushi, others do cakes, desserts and

TRADE

STORIES SuzanneKeane,SynergySuite MybrotherNiallandIcreatedour hospitalitysoftwareproduct SynergySuiteinDublinin2002.A businessintelligencetoolforpub andrestaurantchains,itwasa pioneerofthesoftwareasa servicemodel.Nowadays, everyoneistalkingaboutthe cloud,backinthosedaysIreland didn’tevenhavebroadband,but weknewSaaSwasthewaytogo. ImovedtoLondontosetupa UKsalesofficein2009.Today85 percentofourrevenues–andwe haveaturnoverofinexcessof¤1

million–comefromexport,with theUKaccountingforthreequartersofthat. TheUKappealedtousbecauseithadmuchbiggerpuband restaurantchainsthanwere availableinIreland.Ourfocushas beentoworkwithexisting, complementarypartnersinthe UK,suchascash-register companies,tosellourproduct. Theexperiencegainedinthe UKhasmadesellingfurther afieldeasier,withbusinessnow alsocomingfromNorway,the

Patrick Coveney, chief executive of Greencore: “Dublin is a pretty convenient location from which to run a fragmented set of assets in the UK”

quiches. Another handles soups. One produces 450 million Yorkshire puddings a year. “That is one of the reasons it is a problem for us having a manufacturing plant in Ireland. You get positive economics out of having one specialist facility operating at a national scale with 60 million possible customers in a way that would be difficult to do in Ireland,” says Coveney. “We do two-thirds of all of M&S sandwiches, two-thirds of those in Sainsbury’s,

we do all of the sandwiches in Morrisons, Asda, Co-Op and WH Smith, and about half of the sandwiches in Boots,” he says. Time is the key. The company’s products are often eaten within 24 hours of being made, though Greencore is taking an increasingly direct hand in making sure that stores have what they need, both to improve profits and to reduce waste. “Sandwiches are a bit like fresh flowers in that you have to run with certain levels of waste in order to have good availability,” he says. The judgment lies between having too much that will have to be thrown out, or “big spaces in stores and missed opportunities”. Greencore’s Manton Wood plant in Nottinghamshire has 3,000 people working at peak levels producing sandwiches. This takes account of all the added automation that has been introduced since the plant was built 12 years ago, to very advanced standards. A good weather forecast, rare last year in Britain, will influence production. “It is quite seasonal. People will get out of the office and eat in parks in good weather. Typically, you will get a jump of 10 to 15 points in good weather,” says Coveney. For now, Greencore is beloved by market analysts, who regard the company as a “buy”, believing that the ready-meal market will grow, while the company’s British set-up helps ‘to deter new entrants and secure pricing’, in the words of one. In the words of another, Greencore’s stock is being undervalued in a world where ‘high-quality private-label’ food ranges have become ‘an increasingly important point of differentiation’ for the major supermarket groups. Yet another, Investec believes the UK sandwich market could ‘if we are right at least double in size’ as customers abandon

NetherlandsandGermany.Our company,whichemploys10 softwaredevelopersinIreland andthreesalesstaffintheUK,is actuallybenefitingfromthe downturn,intheUKandIreland. Duringtheboom,restaurants didn’tcareaboutcosts.Nowadayseverybodyiswatchingthe bottomlineandthefactthatour productcangoinwithoutanybig capitaloutlaybutrather,onapay asyou gobasis,anddoesn’t requireanytrainingtouse,has helpedus.

making them at home for better-made, but also cheaper product on the supermarket shelves. Further savings can be squeezed out of the operations taken over when Uniq was bought, analysts believe, while tax losses that company had accrued before it was taken over will be useful in reducing Greencore’s own tax bill in coming years. Coveney is confident about the company’s business model. “There is a trend towards convenience [with] food that is easier to prepare, or easier to source. Some of what we do makes forms of scratch-cooking easier; we provide sauces and components. “But, equally, we’ll have ready-meals to watch the football on a Monday night,” he says, adding that the future lies in privatelabel products for supermarket giants, not in branded goods – except for the Coca-Colas and Nescafés of the world. “Ten years ago, about 25 per cent of all food was private label. It is about 40 per cent today and forecast to be between 50 per cent and 60 per cent by 2020. Retailers are competing harder and harder. For Nescafé, Coca-Cola or Dolmio it doesn’t matter, but secondary brands are suffering. “We benefit from that. We run with a lower-margin business than the branded businesses, but we have less invested in it as well. We don’t have any advertising or marketing costs. “Our return on sales is around 6 per cent, but our returns on capital would be 12 per cent or more,” he says. Given its hybrid existence, Greencore now gets help from both the Irish and British governments as it “builds business in the US that has its roots in Ireland, but that does most of its business in the UK”, says Coveney. “Sometimes people say to me, ‘Are we an Irish company or a British company?’ I say, ‘We have a Greencore culture. We all come at it from different places. There are brilliant strengths that come from an Irish heritage.’ ”

THE MOO MONITOR NANOTECH FOR A COW FriskycowsonBritishfarmsare providingagoodmarketforaKerry firm.TheMooMonitor–anecklace madebyaKerrycompanyDairymaster–wentonsaleinBritaininthelast yearandsaleshavenowbegunto “sky-rocket”,accordingtothe company’schiefexecutive, DrEdmondHarty. “Typically,farmersobservethe cowsandseewhichofthemismore active,whatcowsaremountingeach other–verylabour-intensive.Therisk ofmissingsomethingishuge.Weuse electronics,softwareandnanotechnologymoreaccuratelytomeasure whatisgoingon,”hesays. TheMooMonitorhasbeenonsale inBritainsincelastyear,followinga distributionagreement withaBritishbasedbreedingcompanyCogent:“It isarealgame-changer,”Hartysays. “Ifyoulookattheeconomics,it costsabout¤250foreachtimea farmermissesthatacowisinheat. Thatcanhappenwitheachcowevery threeweeks.Thecowcalveslater,if youhaveahigherdegreeoffertility, youlosethevalueofaheifer. “Subsequently,production[of milk]islessandthatcowinvariably endsupgettingculled,sothereare hugeeconomiclossesinthat,”says Harty,wholeadsateamofnearly300 staffatthecompany’splantat Causeway. Operatingsince1968,whenthe companywassetupbyhisfather Ned,Dairymasterbegansellinginthe UKin1990.Today,itsUKbaseat Bromsgrove,nearBirmingham,has half-a-dozenstaff,butislookingto recruitmore–themajorityofitssales comethrough20dealers. Mark Hennessy

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 25

PROFILE

In a class of its own For thousands of British farmers, equipment made by a Carlow firm is a vital ingredient in the farmyard, writes Mark Hennessy, London Editor

uff Burrell, a blunt-speaking Northumbrian beef farmer from Alnwick, is a man who wastes little time on flattery, but if something is good, then it is good. By that yardstick, equipment bought over a decade from Keenan Systems are worthy of praise. Farming 1,000 acres, Burrell has a four-year-old Keenan feeder-wagon, along with the Borris, Co Carlowbased company’s PACE feeding system, which measures and records everything fed to his herd. “PACE is marvellous, saves me a lot of time in costings. I can check exactly what the wagon is doing. It just gives one such control without having to sit there all day watching what a man is doing,” he says over the sound of machinery. Six thousand British farmers are using Keenan equipment, says the company’s chief executive, Gerard Keenan, who came back from working with John Deere in Germany to join the company after his father set it up in the late 1970s. From the off, the company was about exports, with Britain the firststop: “Not the biggest market that we have now, but it is the second-biggest. France would be our biggest now, 90 per cent of what we do is exported.” Last month, it won a prestigious prize from the 70-year-old Oxford

Duff Burrell: beef farmer from Northumbria uses feed equipment made in Carlow

Farming Conference and Royal Agricultural Society of England for work it has done with scientists to boost milk production with less feed. Farmers using its Mech-fiber System increased production by 1.74 litres per cow per day, using 0.64kg less feed – a 10 per cent increase in the conversion of food into milk, or a gain for the farmer of 2p per litre of milk. British farmers, once prosperous and comfortable, have had a tough time, says Keenan: “Thirty years ago, you went onto a farm with lovely houses and they had a lifestyle. A lot of that has disappeared, they have had it rougher than almost anywhere I have seen.” Natural and man-made disasters, such as foot-and-mouth and BSE, have not helped, but, nor, has the fact that agriculture in Britain has rarely had a political voice in a country used for two centuries to importing food to supply itself. However, politicians are finally waking up to the need to guarantee food security in coming decades, while evercompetitive supermarkets have begun to realise that British suppliers must be paid enough to survive, says Keenan. “It has been a process , but this government sees farming as more important than it did before and retailers and processors realise – not in a wide-eyed way, but in a realistic way – that this thing needs to work through the

26 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

chain,” he says. In some places, the industry is already practically dead. In northeast Scotland, dairying is all but finished because the processing plants have gone. “Little supply, no processor. By definition the remaining farmers have to drop out,” he goes on. Last year, British farmers took to the streets to protest about milk prices: “You finally saw the quiet British farmers break out. In other countries they don’t need to be pushed to the line to show their teeth. British farmers are a stoical, tolerant group. That has now changed.” Higher prices were offered, but not enough to guarantee longer-term survival. However, the actions of supermarkets will not alone decide the future. Besides getting higher prices for their goods, farmers must become more efficient. Already, the future is beginning to form. Supermarkets such as Tesco and Sainsburys are forming their own supply-chain. In Tesco’s case, 1,000 farmers supply it with milk, while Sainsburys has 400 on its books. Equally, supermarkets, not farmers are beginning to pay for the cattle put out on grass. “In a sense, that sounds negative, like dependency, or that farmers are acting as agents, but on the other hand, if they are profitable and successful

they will be happier and they will be less risk for them. I think you will see others step in and take the risk. “Banking will get tighter. That is why retailers are beginning to step in and putting cattle on farms, I don’t know how big it is, but it is happening. Morrisons and Tesco are doing it,” says Keenan, who describes the changes afoot as ‘some of the most exciting in the world’. “Our business is moving from selling hardware to creating integrated value in collaboration with others. We have learned how we can produce more beef, more milk from less feed. I think the food supply chains that will happen in Britain will lead the world.” Internationally, the world has to produce a third more food, with a third less resources: “Feed efficiency is a bit like selling energy efficiency 20 years ago. Everyone likes it, but sometime in the future. Most businesses are based on throughput and output, but not efficiency,” he says. Now selling a fifth of its production into Britain, Keenan Systems – with 250 people in total and 160 in Ireland – regards it “like a home market”. Back in Alnwick, Burrell, a customer of Keenans for over a decade, sees the Carlow company playing a role in bringing farmers “near to profit, or, better, into it”, he says with all the directness of a Northumbrian: “Nobody else in the same class,” he says.

The Irish Times Top 1000 Companies is available online at www.top1000.ie, a new website from The Irish Times.

www.top1000.ie

IN ASSOCIATION WITH

ARTS

Portrait of a city There are many opportunities for Irish artists to study and to sell their work both in the UK and further afield, writes Gemma Tipton, and London is a good place to start

hen the capital city of your nearest neighbour just happens to be one of the twin centres of the art world (the other being New York), the opportunities for Irish artists are obvious. But how does the relationship between Ireland and the UK work in practice for artists, and for those who make their living in the art business? A thriving network of exchanges between arts organisations – from artists’ cooperatives to major museums and galleries – enables travel, exhibitions, studio residencies and dialogue between artists in the two countries. Nevertheless, while UK artists do come and live in Ireland (the Irish tax exemptions on income from artistic work are a lure), artists here who want to get to the next stage in their careers should explore the openings London offers. This is because over the past two decades, London has re-established its pre-eminence in the art world and as a centre of the global market for art, driven primarily by the Tate (tate.org.uk), and by the emergence of the Frieze Art Fair (friezelondon. com), which takes place each October in Regent’s Park. In 2012, more than 55,000 people visited Frieze, to see art from 175 galleries from around the world. Given that these visitors included groups from the Museum of Modern Art, the Guggenheim, and the Whitney (all New York), plus the Art Institute of Chicago, the Centre Pompidou Paris, and the Kunsthistorisches Museum in Vienna, it is clear that Frieze is now one of the key sites at which the art world does its business. Regular Irish attendees at Frieze are Kerlin Gallery (kerlin.ie), who see the event as a way of bringing the artists they represent

to another level, as much as a selling opportunity. “As a business, our product is less in demand in Ireland as a result of the recession,” says Kerlin director Darragh Hogan. “So it’s important to get our artists out to a wider audience. It’s also culturally important for them to be there.” Hogan cites artist Dorothy Cross’s forthcoming show at Turner Margate this October as being partly “a result of the visibility that being seen at Frieze has given her” (turnercontemporary.org). The price of an artwork in the contemporary market is a complex thing, driven and supported by a range of factors including the prominence of the gallery representing the artist, critical reception in key publications, the exhibitions and museum shows on the artist’s CV, and who else has purchased their work. All these are ranged alongside the aesthetics and content of the work itself, so it becomes clear why galleries such as Kerlin are prepared to invest the £10,000 (¤12,400)-plus it costs for a stand at Frieze in support of their artists. Culture Ireland can provide funds to galleries and organisations wishing to show

“

In the boom, people could sell anything, and did. Now the market is crying out for quality and estimates must be realistic

28 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

Joy Gerrard stands under Elenchus/Aporia, at the London School of Economics. Photograph: Nigel Stead

the work of Irish artists abroad (cultureireland.ie). With the work of more than 2,400 artists on show at Frieze, it’s hard to believe that these are actually a minority – not all artists will get representation, and not all galleries will attend the art fair. So what can artists themselves do to access the UK art world? Joy Gerrard has been based in London since 1999, when she went to take an MA at the Royal College of Art. She says that London-based MA courses at the leading art schools are vital, not only for developing your work, but for making connections and meeting people. The Arts Council in Ireland (artscouncil.ie) offer bursa-

ries for post-graduate study, as well as supports for making work, while the individual art colleges have bursaries on offer too. Gerrard lists the leading MAs as those at the Royal Academy, the Royal College, the Slade, Goldsmiths and Chelsea. There is also a network of art residencies across the UK, where artists have the opportunity to develop work (see isendyouthis.com for details). These are useful, too, to meet curators, gallerists, writers and other artists, and maybe find UK gallery representation, as artists with Irish galleries may also be represented elsewhere (Alice Maher, for example, is with Green on Red in Dublin, and Purdy Hicks in London). Gerrard’s own largest recent commission is a major piece of public art at the London School of Economics. The project came through a longlist/shortlist competitive tendering process, run by the Contemporary Art Society. “I wouldn’t have been

on the list if I hadn’t lived and worked in London; so the curators had seen my work in group shows and made studio visits.” Currently she is working on a large studiobased drawing project, the first stage of which will be shown in London and New York, early next year (joygerrard.net). When art sells for record figures, it is usually at auction, and when it comes to the Ireland/UK market, there are two schools of thought. Sotheby’s maintain an Irish office and a network of consultants in Ireland, but, despite holding viewings in Ireland (and New York), they sell Irish art as part of a British and Irish Art sale, twice yearly in London. “London gives us access to a much bigger market, and we can reach out to our international clients more effectively from there,” says the head of Sotheby’s Ireland, Arabella Bishop. Sotheby’s next Irish art sale is on May

BUSINESS AND THE ARTS

Theimportanceoftheartstobusinesswas oneoftheareasunderdiscussionatthe GatheringForActionConferencelastmonth intheAvivaStadium. ApanelincludingAbbeyTheatredirector, SenatorFiachMacConghail;Minsterfor Arts,HeritageandtheGaeltachtJimmy Deenihan;StuartMcLaughlinfromBusiness toArts;HugoMacNeillfromGoldmanSachs; andTimO’Connor,chairmanofTheGatheringdiscussedthewaysinwhichbusiness supportfortheartsfeedsbackintocommunities,andhowartnurturescreativityand success.TheConferenceworkinggroupis alsolookingtodevelopstronganddispassionateanalyticsandresearch,inorderto investigatethebenefitsofartssupports. britishirishchamber.com.

23rd, and consignments are accepted until the beginning of March (sothebys.com). Sotheby’s holds the record for the highest total for an Irish art sale worldwide, with £7,152,337 (¤8,360,110) reached in 2001. In 2002, Sotheby’s also achieved the highest price for a single Irish artwork at auction, for Sir William Orpen’s Portrait of Gardenia St George with Riding Crop for £1,983,500 (¤2,317,790). The Sotheby’s Irish sales figure for 2012 was £1,538,375 (¤1,797,564). “In the boom, people could sell anything, and did,” says Bishop. “Now the market is crying out for quality and estimates must be realistic.” She cites Paul Henry as an artist whose prices have held up well. Bishop says that in 2012, 80 per cent of bidders at the Irish sale were based outside Ireland, although it is difficult to decipher which of these are Irish but living abroad, and which are “genuinely” international At Adam’s, director James O’Halloran outlines a different approach. Adam’s did have a link up with Bonham’s in the UK, collaborating on Ireland/UK sales. This ceased in 2010. Now, Adam’s research finds that Irish pictures are mainly bought by Irish people, living in Ireland, as well as by the Diaspora. While they have an active website, Adam’s also accesses UK buyers by “traditional means, sending huge numbers of catalogues to the UK. Personal contact is also key,” says O’Halloran. The UK is also a strong source of work for the auction rooms at Adam’s – O’Halloran estimates between 10 and 12 per cent of vendors are UKbased. The reasons these vendors choose to sell in Ireland are, O’Halloran believes, practical. “Ireland is where 99 per cent of the buyers are,” he says. Adam’s next Irish art sale is on March 26th (adams.ie). O’Halloran says the art world is localised, pointing out that the market for contemporary British art is very “hot” right now in London, but very few French people are buying it. Similarly the strongest market for Danish art is in Denmark and so on. So,the message for Irish artists looking to explore the UK is to site yourself in London, and work as a contemporary artist, rather than a contemporary Irish artist. At the top level, nationality is less significant than location. The competition there is fiercer, but the market is massive.

TRADE

STORIES BarryMcCaul, McCaul’sGoldsmiths

MybrotherDavidandIsetupMcCaul’s GoldsmithsinLondon’sExeterMarket in2009.WecametoLondonbecause therewasn’t reallyamarketforthekind ofhigh-end,contemporarydesignwe dobackhomeinDublinatthetime. HavingbeenhomeforChristmas,Ithink thatmightstillbethecase. Ithasgonereallywellforus.Wewere profitablewithinsixmonthsandare hittingallourgrowthtargets.Thereisa recessionheretoo,butit’snotasbadas athome.Lastyearwasourbestyear yet. Wedon’tdoasmuchtradebusiness nowasweusedtobutonethingwe havenoticedishoweasyitistogetpaid here,comparedwithwhatcolleagues athomearetellingus.Here,itisvery raretohavetoremindsomeone. Paymentcomespromptlywithin 30days,andnormally yougetacheque onthespot. Inanycase,nowthevastbulkofour businesscomesfrompeoplecomingin offthestreetandtheypayupfront. Itisaneasyplacetodobusiness,not verybureaucratic.Oneday,we’dliketo openastorebackhome,butitwon’tbe inthenearfuture–it’smoreofalong termplan.

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 29

ENERGY

Can Ireland bridge the energy gap? Ireland has the potential to export ‘green’ energy to Britain to meet its shortfall but it will be no small endeavour writes Dick Ahlstrom, Science Editor

complex interplay of commercial, strategic and political influences is at work in the energy sector, something that could bring profound change to our electricity supply in the future. Ultimately, it will lock our own electricity grid into that of Britain and also into the wider European Union, most likely via France, to help deliver the goal of a unified electricity grid for Europe. The pursuit of this ambition took an important step forward for Ireland on January 24th with the signing of a memorandum of understanding between Ireland and Britain on the export of “green” energy. The agreement now opens the potential – rather than the commercial reality – for electricity exports from Ireland. The financial and business side of achieving an ambitious export target of 5,000 megawatts is complex and must now be worked out to see if it makes commercial sense . But on the face of it this is achievable. The memorandum commits the two governments to working together to open up trade in renewable energy, in particular wind power generated in Ireland. The plan is helped along given Ireland will have more wind energy than it needs to meet an EU directive on renewable energy while “Britain is heading for a shortfall in its EU targets”, explains Pat Doherty, chief executive of the Electricity Supply Board. Ireland can help bridge this gap if it makes commercial sense to go after a massive ramping-up of wind energy production up to the 2020 EU deadline. However, it would be no small endeavour. Britain has the potential to take 5,000 megawatts from Ireland to meet its targets for renewable energy supply. This is more than the current peak electricity demand from all of the Republic of Ireland during the coldest months of the year, said Mr Doherty. And this is all meant to be “green” electricity generated by wind, or if it become commercial wind plus wave/tidal. An investment of ¤10 billion is required to make it happen. Irish wind energy pro-

ducers would have to seek planning permission for and purchase about 1,500 3.5MW wind turbines to reach the target generation levels for export. Then there is the onshore cabling linked to a huge new 5,000MW under sea interconnector to get the power across and plugged into the British electricity grid. This interconnector would have 10 times the carrying capacity of the recently energised 500MW interconnector that links north Co Dublin with Wales, enough to provide power to about 3.5 million homes,There would be rewards if a commercial deal, or collection of deals, could be closed. The target export level would be worth ¤1.6 billion a year and the construction phase could employ 28,000, the government believes. It would also gel with the EU’s ambitions for the future supply of electricity. “There is an EU drive to increase interconnectivity,” said Mr Doherty. This was being pursued by linking regions together and ultimately the whole of Europe. The 5,000MW interconnector would represent an initial regional connection and the potential for an interconnector to northern France would give us a link to a unified grid. Opening these links could mean of course that electricity could flow in both directions. There would be times, for exam-

30 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

Britain’s secretary of state for energy Edward Davey with Minister for Energy Pat Rabbitte at last month’s signing of a memorandum of understanding to export gigawatts of green energy to Britain. Photograph: David Sleator

ple if winds were slack, when power would be flowing towards rather than from Ireland. For this reason the ESB had taken a “strategic” initiative to ensure there was a mix of electricity supplies here including coal, hydro, wind and several different forms of gas to help protect our home market. The ESB has also invested in its own UK-based electricity supplies so that it has a presence on the far side of the Irish Sea. This ensures that the company would still be a player in power generation should things change in the future. Wind represented “an integral part” of the energy mix, he said. There now begins a series of meetings involving the two governments and potential investors/suppliers in order to deliver the target 5,000MW. These will be extremely complex, said Mr Doherty. It will include issues such as siting, building and integration of turbines and the application of wind energy subsidies paid to suppliers because of their extra costs. Minister for Energy Pat Rabbitte has made it clear that he does not want a situation where the Irish taxpayer ends up footing the bill in some way, and so the government will avoid becoming a high stake investor in the venture. And yet the government is committed through the memorandum to helping to make it all happen.

ENTREPRENEURS

Economies of scale Expansion is limited in a small market. Thank God for overseas, writes Pamela Newenham

hen it comes to markets, size matters. Which is why, for many companies, growth means expanding their operations beyond the national border. A small domestic market, such as that in Ireland, tends to limit competition possibilities due to the ease of market dominance by firms. Businesses in Ireland are also constrained in growth because of the size of the market. For a business in Ireland to have 50 employees, it needs to reach a much higher proportion of the domestic market than a company in the UK or Germany. To expand, businesses need to look towards the export market – which brings different challenges. Ian Barrett, co-founder of solar solutions company Joule, said while there are a lot of Government bodies such as Enterprise Ireland and county enterprise boards to advise businesses on exporting, nothing can prepare for the reality. “We discovered we had to tailor our product for different markets. The solar products we sold in Ireland weren’t suitable for the UK market even though they have the same systems as us, as there is different product specifications required there which we didn’t realise.” However, he believes the UK market is hugely important for Irish SMEs. “We supply 30,000 solar units each

month in the UK, but only 5,000 a month in Ireland. We had to branch into other markets as the domestic market is so small. We have 70 per cent of the market here and that’s about all we’ll get too. It’s not enough.” Barrett said he found the transition from being a micro-enterprise with just two employees (Barrett and his co-founder Ronan Ginnell) to a medium-sized business with 55 employees was difficult. “The company recently acquired its Irish competitor, retaining that company’s 15 staff. “When we started to get really busy, we had no choice but to expand out staff. We realised if we wanted to grow we would need a management team. “I’m not a very good delegator but I’ve had to delegate.” Patrick Burke, a partner with Grant Thornton, says he believes small businesses find it difficult to transition to mediumsized ones due to a reluctance to give up control. “People feel they have given birth to a baby and they don't want to hand it over to a babysitter. Jack Welch, the former chief executive of General Electric said ‘anyone can run a business . . . getting from small to large is where the art is’ and I think that is very true.” He echoes Barrett’s view that the UK market is very different to the Irish market, saying SMEs have to research the UK market carefully before exporting, and understand consumer behaviour there is very different to Ireland.

32 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

“Getting from small to large is where the art is”. Ian Barrett (left) with Ronan Ginnell, founders of solar-solutions company Joule

“More people in the UK bought stuff online on Christmas Day 2011 than went to church. Consumer behaviour there has changed dramatically, especially when it comes to shopping online.” While Burke says Ireland ranks very

highly on league tables as a place to locate a business due to the ease with which they can be set up here, he believes it is not the best place to do business if you are solely reliant on Irish consumers. “There is downward pressure on Irish consumers due to bank loans and debt.” However, with SMEs accounting for twothirds of private sector employment in Europe, business leaders say it is important for Government officials and agencies not

TRADE

STORIES ShaunNewman,TheDryCleanerOnline Wehaveanonlinebusiness directoryofdry-cleaners,with around90percentofdry-cleanersinIrelandonit.Thebusiness wassetupinIrelandbyJonathan O’Brienfiveyearsago,andIcame onboardlastyeartooverseea moveintotheUK. JustbeforeChristmaswe launchedamobileapplication thatallowsdry-cleanersuse push-notificationmessagesto providespecialofferstocustomers. Itwillmakeourproductavery

to neglect them in their endeavour to attract foreign direct investment and large multinationals. SMEs have the ability to spearhead wealth generation and provide a sustainable source of employment, according to Mark Fielding, chief executive of the Irish small business group Isme. “There is a perverse view from Government that we should look after the highgrowth potential and large multinationals.

effectivemarketingtoolfor dry-cleaners. Weareintheprocessof launchinganelectronic-paymentsserviceaspartofthe offeringtoo. Fourmonthsagowemadethe movetotheUKwithaviewto developingthemarkethere, basingourselvesinManchester SciencePark,aninnovation centre. Themainreasonbehindthe movewasthesimplefactthat therearefivetimesasmany

“It’s like a gardener only looking after the well-growing plants and not planting any seedlings for the next year.” Mr Fielding said a lack of bank finance and credit resulting from the downturn and banking collapse was stifling the export growth potential of SMEs. “We only have four million people, compared to the likes of the UK where there are 60 million people. “Thus there is a strong need for businesses to expand into other markets and be able to export.” He said the Government needed to create an environment where it is easier to set up a business. Red tape is still a major issue for many companies in Ireland, though the recently published Companies Bill will go some way to lessen it. Changes included in the Bill will mean that many of the 12,500 private companies limited by shares which are established every year will be able to incorporate more easily, resulting in average savings of ¤1,200 in professional fees in each case. It will also be possible for such a company to have only one director.Frank O’Keeffe, partner in charge of the Ernst & Young Entrepreneur of the Year Award, said it is imperative the Government doesn’t neglect medium-sized enterprises in their endeavour to attract foreign direct investment and global technology firms such as Google and Facebook. “For example, we have 310 entrepreneurs in the Ernst & Young Entrepreneur of the Year alumni. They are mostly medium-sized companies, yet between them they employ 140,000 people and generated a turnover of ¤15 billion last year. That shows the power of medium-sized businesses in Ireland.” He says while the UK is renowned for being one of the most mature and dynamic markets in the world, Ireland is fast catching up.“Per capita, we are on a par with the UK for entrepreneurs. Our inherent ability as Irish people to sell, talk and explain really helps us.”

dry-cleanersintheUKasthere areathome. Itisprovingaveryeasyplaceto

dobusiness,too:dry-cleaners herearemuchthesameasat home–mainlyfamilybusinesses –buttheyaremoretechsavvy andopentonewtechnology. Farmore,forexample,have websitesandareonTwitter.They arealsomorelikelytobeaheadof thecurveonmobilepayments. WechoseManchesterbecauseitisamanageablesizein termsofgettingdry-cleaners hereonboard.Oncewesucceed hereitwillmakeitmucheasierto wininLondon.

Eversheds: Almost everywhere Withmorethan4,000staffin45officesin 29jurisdictionsacrossEurope,theMiddle East,AsiaandNorthandSouthAfrica, Evershedsisanexampleofalegalfirmthat offersafullrangeoflegalservicesto internationalclientswithbusinessoperationsinIreland,theUKandfurther afield. “Wehaveaninternational mergersandacquisitions group,aninternationalHT group,andaninternational foodanddrinkgroup,”says managingpartnerAlan Murphy.“Weoffera project-managementapproach. Clientscanaccessallofthe servicestheyneedfromthe EvershedsInternational

networkthroughonepartnerwhomanageseverythingontheirbehalf. “Werecentlystartedworkingforan internationalclientwhorequiredaservice across25jurisdictions.Inthemajorityof cases,thesewereEvershedsofficesandin sometheywere‘bestfriends’ offices–partnerfirmsweuse incountrieswherewedon’t haveadirectpresence.This wasallorganisedthrougha singlepointofcontacthereinDublin whomanagedanddeliveredeverything.” TheserviceofferingtoIrish-based clientsintheUKisalsoimportant. “Aroundhalfofourstaffarebasedin theUKandwehaveaverystrong presenceintheBritishregions,”says Murphy.

AMONG THE GREATEST ENTREPRENEURS IN THE WORLD Irelandmaybesmall,butitisalsooneof themostentrepreneurialcountriesinthe world,accordingtoPaulaFitzsimons, co-authorofthe Global Entrepreneurship Monitor report,theworld’slargest studyofentrepreneurship. TheGEMreportranksIreland’s entrepreneurialactivity14thinthe OECD,with2,200people settingup newbusinesseseverymonthin2011, accordingtoFitzsimons. Whilemuchofthatentrepreneurial spiritmayhavecomefromnecessity, Irelandisstillhighlyentrepreneurialand aheadoftheUKintermsofstart-up businessesestablished. “Itischeapertosetupabusinessin IrelandthanintheUK,especiallyinthe techsector,”saysJohnEgan,chief executiveofficerofArchipelago,the largestcommunityofentrepreneursin Ireland.“It’salsoeasiertogetinternationalattention,asyoucanreachthetopof

thepilequickerinIreland–apopulationof fourmillionpeople–thantheUKwhere there’s60millionpeopletocompete with.” However,Eganbelievesthetax incentivesforstartingabusinessinthe UKarebetterthaninIreland,asisthe fundingforstart-upcompanies. “Irelandismoreabouttaxbenefitsfor already-establishedbusinesses.We havealowcorporationtax,butthatonly helpscompaniesthatareupandrunning successfully.Thereshouldbetaxincentivestosetupabusiness.” Egan,the2013recipientoftheDavid ManleyEntrepreneuroftheYearaward, saidhebelievestheattitudetowards entrepreneursinIrelandhaschanged considerablyinrecentyears.“Unlike othercountries,entrepreneursinIreland foryearswereseenaspeopleonthedole whoweretooproudtoadmitit.Itwasn’t acceptabletobeanentrepreneur.”

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 33

FORECAST

Sterling deals still to be done There will be plenty of opportunities in Britain in 2013 despite its recent difficulties, writes Fiona Reddan

t’s our closest trading partner, but unfortunately for Irish companies, the UK has experienced its own challenges over the past few years. Excessive public debt, weak consumption and investment, and a knock-on effect from the European sovereign debt crisis, have all conspired to make it a difficult time for the UK economy. Improvement may lie ahead, however, with the European Commission predicting growth of almost 1 per cent for the UK economy this year. While moderate, it would make the UK the fastest-growing of Europe’s five biggest economies. “Our position on the UK market is that it continues to be the primary market for SME exporters, who would have tended to have the UK as their only export market,” says John Whelan, the chief executive of the Irish Exporters Association. However, the economy has been going through a recession and Irish exporters have also struggled with the exchange rate differential, as the Bank of England’s quantitative easing strategy has kept sterling weak, he says. This eased towards the end of last year and “we gained about 7 per cent favourable movement in exchange rate” notes Whelan, but the concern is that “the Bank of England will intervene again and take that small advantage out”. Nonetheless, for many Irish companies the UK is where it’s at, says Michelle Butler, who for five years has been helping Irish food companies to enter the UK market in her role as manager for British and Irish markets with Bord Bia. “Before, coming into the UK was a luxury some suppliers were looking at. Now it’s a necessity as the domestic market is contracting and in Ireland the market is significantly smaller than it used to be,” she says. So where are the opportunities? For Whelan, it’s not in sectors that are fully exposed to the plight of the British consumer. “That’s where the market is toughest,” he says. Despite the recent furore over some burgers produced in Ireland, the food sector offers potential for growth. Given the

duplication of retailers on both sides of the Irish Sea, Butler says food suppliers can leverage on their relationships with stores, such as Tesco and Lidl, to get into an overseas market. Going by export statistics, indigenous Irish business is all about food these days, with exports continuing to reach new highs. And for Irish food companies, the UK is often the first port of call with a retail food market of £100 billion (¤115 billion) that substantially dwarfs Ireland’s ¤8 billion market. “It’s a significant opportunity – just to get one listing in the UK can double the turnover of a company overnight,” says Butler, though she concedes that getting a listing in a British supermarket is no guarantee of success. The energy market also presents a substantial opportunity, as Ireland gets ready to export into the UK. As Ireland ramps up its renewable energy development under the 2020 strategy, an inter-governmental agreement will allow exports of wind-generated electricity from the Republic to Britain. Irish companies will also find opportunities in the waste and environmental sectors, where they have a strong record, says Bill Toomey, head of the British-Irish trade team at AIB in the UK. “Increasing land fill costs, tax costs and Government initiatives to improve recy-

34 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

Two-way trade between Ireland and the UK stands at about ¤1 billion a week

“

For Irish food companies, the UK is often the first port of call with a retail food market of £100 billion (¤115 billion) that substantially dwarfs Ireland’s ¤8 billion market

cling performance have created a demand for improved technology and processes,” he says. Two-way trade between the two countries stands at about ¤1 billion a week, and Ireland is the UK’s fifth largest export market and the UK’s largest export market in sectors such as food and drink, clothing, and fashion and footwear. While large retail companies of the likes of Tesco and Marks & Spencer have traditionally been very strong in Ireland, given the economic difficulties on both sides of the Irish Sea this has weakened in recent years. This is evident in the uncertain future facing music retailer HMV. Nonetheless, the business-to-business sector is seeing growth. Toomey says Ireland offers a lot of potential for UK companies, noting that more than 50 per cent of his division’s customers are British. There is another significant threat to this relationship on the horizon: the UK’s apparent ambivalence with regards to its future in the European Union. “Business really needs certainty and it’s one of the concerns we’ve had as a chamber,” says Steve Aiken, the chief executive of the British Irish Chamber of Commerce. In the short term, however, while a slow return to growth for the UK economy means that this is likely to be another challenging year for businesses, opportunities in niche sectors will remain.

NORTHERN IRELAND

Northern exposure

Cross border-trade currently supports 10,000 jobs on the island of Ireland, but the differences between the rates of corporation tax north and south needs to be addressed, writes Francess McDonnell

nterTradeIreland’s latest quarterly Business Monitor – which surveyed 1,500 businesses in the north and south – found that more than half of southern businesses were either in survival mode, contracting or winding down, while 44 per cent were in the same position in the North. Despite this, there are still many businesses showing strong resilience according to Aidan Gough, strategy & policy director of InterTradeIreland, “and it is evident that these are firms who are participating in cross-border trade or exporting further afield”, he says. For many companies cross-border trading is the first step to exporting to other markets. “Once you become an exporter across the island, it is much easier to become an exporter off the island.There are so many more opportunities today for cross-border trade because transport links are so improved from north to south, there is an infrastructure in place and a market right on the doorstep,” he says. Research carried out by InterTradeIreland found the total value of trade from south to north was more than ¤1.1 billion in 2011.The latest manufacturing sales and exports survey carried out by the Department of Enterprise, Trade and Investment (DETI) in Northern Ireland shows that total cross-border sales to the Republic increased by £52 million to £1.3 billion over 2011/2012. At their peak, total sales from north to south were estimated to be £1.6 billion. The DETI said this survey shows that the Republic of Ireland remains Northern Ireland’s single largest export market and last year's figures reverse a previous trend of annually decreasing sales.

But after adjusting for price changes throughout the year, the latest sales figures for 2011/2012 show an increase of 3.5 per cent in real terms. InterTradeIreland estimates that cross border trade currently supports in the region of 10,000 jobs on the island. One of the driving forces in this job creation has been the success of the cross-border agrifood sector, which was estimated to be

“

Once you become an exporter across the island, it is much easier to become an exporter off the island.There are so many more opportunities today for cross-border trade

Aidan Gough, strategy & policy director of InterTradeIreland

36 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

worth a total ¤1.2 billion in 2011. The sector accounts for around 8 per cent of GDP. According to Bord Bia, the weakening of the euro relative to sterling helped in particular to boost trade to the UK and Northern Ireland last year. Like many other business leaders in Northern Ireland, Nigel Smyth of the Confederation of British Industry in the North has concerns about proposals by the British Prime Minister David Cameron to hold a referendum on whether the UK should remain in the European Union. Any change to the current status quo could have major implications for Northern Ireland from a trade perspective. “The future of the UK's position within Europe is of critical importance to Northern Ireland. We are the only region within the UK with a land border with another member state and Ireland is our largest export market with over £1.2 billion of sales in 2010/11 representing over one fifth of our total manufacturing exports,” he said Eamonn Donaghy, who is involved with GROW NI, the umbrella group of Northern Ireland business, and head of KPMG’s tax practice in Belfast said the impact of the UK leaving the zone would make trading with Europe more difficult. In relation to Northern Ireland, he said that would not be a good thing for “a small region at the edge of Europe, Nor will it be helpful in attracting foreign direct investment which wants to gain access to the EU market place,” he said. He said the proposed UK referendum and the question mark it raises over the future relationship between the UK and the EU would not change the campaign in Northern Ireland to secure a lower rate of

corporation tax for the region. “The benefits of a low corporation tax rate to Northern Ireland are very significant and this will not change significantly whether the UK is in or out of the EU,” he added. It has been estimated that if the rate of corporation tax in the North were to be lowered from its current main rate of 24 per cent to 12.5 per cent, it could lead to the creation of 90,000 new jobs. The disparity between the rates of corporation tax on the island has long been viewed as a major disadvantage for Northern Ireland when it comes to attracting new inward investors because they have to compete directly against the Republic's more favourable rate of 12.5 per cent. It is a debate which many business leaders in the North hope will be settled one way or another before the G8 Summit comes to Northern Ireland in the summer.

Play Services: Whatever the weather

Close Brothers Commercial Finance: The Belfast-Dublin connection HarryParkinson(right),themanaging directorofCloseBrothersCommercial Finance,seesatfirsthandthedifficulties facedbybusinessestryingtosecurenew financearrangementsonbothsidesof theborder. CloseBrothersCommercialFinance isacross-borderbusinessbutalso workscloselywithfirmsnorth andsouthtohelpthemgrowtheir cross-borderbusinessandexpandtheir marketopportunities. Thecompanywhichhasofficesin BelfastandDublinprovidesassetand invoicefinance. AccordingtoParkinsonthecross-

borderdymanicofCloseBrothers CommercialFinanceisabsolutely essentialtoitssuccess. Hesaidthecompanyhasseen evidenceinNorthernIrelandofa recoveryincertainsectorsandthat whiletheeconomyinthesouthstill facesmajorchallengesthereisa generaltrendofimprovement. â&#x20AC;&#x153;Weareopenforbusinessnorth andsouthbecauseacrosstheisland thereisalackoffundingbeingmade available,particularlytosmallto mediumsizedbusinesses,whowantto getintonewmarketsontheirdoorstep,â&#x20AC;? hesays.

Therearenotmanypeoplewho havetheIrishweathertothankfora businessopportunity.ButMel Campbellisone.Thefounderof Lisburn-basedPlayServicesIreland setupin2009,happilyacknowledges thattheofteninclementIrishweather hasbeenacross-borderbusinessboon forhisfirm. Aplayconsultancy,thecompany advisesonthedesignanddevelopmentofnewplaygroundsandindoor playfacilitiesandprovidestailored playgroundsafetyinspectionservices. Italsomaintainsandrefurbishes playareasandtrainsprivateandpublic playgroundoperatorsonhowto regularlyinspectplaygroundsandsoft playareas. Indoorsoftplaycentreshave becomeincreasinglypopularand thesehaveproventobeamajorsource ofbusinessforPlayServicesIreland. Campbellsetuphiscompanyin 2009afteracareerinboththepublic andprivateplayindustry. Twoyearsonhesawthepotential forbusinessgrowthoutsideofNorthernIrelandasaround15percentofhis turnoveratthattimealreadycame fromcrossbordersales. HesoughtadvicefromInterTradeIreland,andsignedupforitsElevatesales developmentprogrammewhich providesfinancialassistanceto companiestohelpthemidentifycross bordermarketsandcustomers. AccordingtoCampbellasaresultof takingpartintheprogrammehewon newbusiness,wasabletodoublehis company'sactivityinthecrossborder marketandaddtwomoreemployees tohisteam. HisadvicetootherNorthernIreland companieswhoarecurrentlylooking attheRepublicofIrelandmarketisto goforitiftheywanttogrowtheir business.

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 37

MERGER

“

Back on track

Our Irish and our UK businesses complement each other perfectly. The ethos of both was always very similar

The bloodstock trade is galloping back after a heavy slump in the downturn, writes Sandra O’Connell

he name Goffs has been synonymous with Irish bloodstock sales for 140 years, with the Kildare-based business known as the country’s premier sales ring for thoroughbred horses. In the UK, Doncaster Bloodstock Sales Ltd (DBS) has been performing a similar role since 1962. In 2007, thanks to personal contacts between the principals of both businesses, the two were merged under the Robert J Goff & Co banner, with Henry Beeby of DBS becoming group chief executive. Goffs is Ireland’s leading bloodstock sales company while DBS is the secondlargest (to Tattersalls) in the UK. This is combined with a shareholding in the leading French Sales company Arqana, the group is committed to becoming the leading company in European bloodstock sales. The UK/Irish merger has enabled considerable synergies for both sides, according to Henry Beeby. “Our Irish and our UK businesses complement each other perfectly. The ethos of both was always very similar. On top of that it made sense because

the bloodstock business in the UK and that in Ireland is really the one business: you see the same vendors and purchasers travelling back and forth all the time,” he says. Goffs employs 22 people at its Kildare base, while DBS employs 16. Last year Goffs sold ¤68 million worth of horses, compared with £25 million sold by DBS. The Irish side of the business has had

Henry Beeby: “A lot of the people who came in as a result of the Celtic Tiger era are gone” challenges to contend with in terms of the collapse of the Celtic Tiger economy. Goffs’ peak year was 2007, when it sold ¤122 million worth of horses. That fell dramatically as a result of the downturn, to ¤45 million in 2010. But sales

have been growing since at a rate of around 25 per cent a year, with sales of ¤ 68m million recorded last year.While the Irish side of the business is profitable it is undergoing a cost cutting programme resulting in the loss of 25 per cent of its staff in redundancies. This rebound does not surprise Beeby. “There is no getting away from the fact that what we deal in is a luxury item, but the bloodstock market is remarkably resilient in so far as it is quick to fall but quick to start moving back up again too.” Horse prices have fallen but so too has supply. “The Irish bloodstock industry was suffering from an oversupply and that is a problem that has been corrected as a result of the recession. Breeder numbers have fallen.” The fact that Goffs, which is owned by 500 shareholders, sells to an international market helped cushion it from the worst of the domestic downturn at home. “It helps that Irish bloodstock is the best in the world, so we are selling the best of the best.” Goffs is owned by some 500 shareholders, the biggest of whom, with a 40 per cent stake, is the Aga Khan, followed by Moyglare Stud, which has a 27 per cent share. Like every other business in the country we have had to work hard on our costs. As a result we achieved around ¤4 million in cost savings,” says Beeby, who is optimistic for the future “A lot of the people who came in as a result of the Celtic Tiger era are gone says Beeby. But that means we are back to dealing with lifetime professionals in the bloodstock industry, like myself, who will never stop.”

TRADE

STORIES CiaranFenton,Fenton&CoLLP I’mfromKanturkinCoCork,and afteraBComminUCCIwentto GoldenValeasatraineeaccountant,followedbyajobinStrongbowinDublinworkinginfilmand TV.Thatledtoacareerinmedia managementintheUK,includingwithFinancialTimesTelevision,ITNandHachette.Tenyears agoIsawagapinthemarket

betweentheneedsofsenior executivesandprofessionals andwhatwasonofferfromhead hunters,humanresources peopleandcareercoaches.I developedapieceofintellectual propertythathelpspeopleto managetheircareersasifthey weremicrobusinesses. SincethenI’veworkedwith

38 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

seniorexecutivesandprofessionalsfromaroundtheworld.My bookMind Your Business is aboutthefactthatorganisations arenowacoalitionofmicrobusinesses.Thesocialcontracthas beenbrokenandanewdynamic isatplay. Mybusinessisbasedin LondonandIliveinBrighton.I

thinkthereareperhapspersonalitydifferencesatplayinthe businessculturesofIrelandand theUK.Irishpeopletendtobe gregarious,openandcandid abouttheirfeelings. ButIthink allnationalitiesrecognisethe conceptofmicromanagingtheir career,particularlysincethe crash.

Doing business in Britain? For Irish companies looking to export and grow, doing business in Britain is the obvious next step. With a market of over 60 million people, the attractions are obvious – and the challenges sometimes less so. We advise Irish companies doing business in Britain by providing the audit, tax and advisory support they need to help them succeed. To ﬁnd out more contact Andrew Gallagher in Dublin on +353 1 410 1550 or andrew.gallagher@kpmg.ie or Eamonn Donaghy in Belfast on +44 (28) 9089 3839 or eamonn.donaghy@kpmg.ie

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TECHNOLOGY

Realising your net worth Growing your market and brand in the UK requires diligent research. But the pay-off can make it well worthwhile, writes Ciara O’Brien

oing business in Britain has always made sense for Irish companies. Ireland’s domestic market has always had some limitations for most companies with an eye on bigger growth, even before the economic downturn. The limited market opportunities in Ireland, coupled with the now difficult economic conditions have made the UK an attractive prospect. Electronics and electronic equipment – along with pharmaceuticals, meat, machinery and organic chemicals – is among the top five export categories from Ireland to Britain, and at ¤1.53 billion a year, it is beaten only by organic chemicals. The UK market is the next logical step for many Irish firms who want to expand their business further afield. Our closest neighbours, the cultural similarities between the two business communities has made it slightly easier for Irish firms to establish a foothold in the market. Frequent transport links, a common culture and language all make it an ideal starting point. Remote monitoring firm Netwatch’s managing director David Walsh described the move outside Ireland as inevitable. “The Irish market is relatively small so it was always an inevitability that we would export internationally,” he said. “Initially, a number of our customers in the Irish market who had operations in the UK approached us, they loved the service we were providing in Ireland and wanted us to protect their businesses and homes in the UK also. It was a natural progression and gave us a good starting point to expansion.” However, Irish technology businesses wishing to make that jump shouldn’t take it lightly. Although there are many similarities between the UK and Ireland, companies should still do their homework before establishing a UK base. Interactive billing company Brite:bill is a relatively new entrant to the market, set-

ting up its London office just over a year ago. But chief executive Alan Coleman already had extensive knowledge of the market, having lived in Britain for some time. The move made sense for Brite:bill; the company provides customised billing services to the large mobile operators here, but wanted to spread its net wider. Because the market is exponentially bigger, Coleman said, it means dealing with entities that are larger and more complex than companies may be used to dealing with. “It can take some time to understand how they organise themselves, because they are larger organisations with more complex decision-making processes,” he said. Familiarity is an advantage in Ireland, where companies often have some form of contact with each other, or can provide information on who key decision-makers are within companies. “In Ireland, it’s much more familiar and intuitive and you can understand how decisions are taken. You also have much lower degrees of separation,” Coleman said. “It’s much more difficult in the UK because you don’t have the same level of connectedness to the market. That connectedness can provide you with vital context.” As such, the networking culture, while important here, is much more crucial in Britain, CBE chief executive Gerard Concannon said.

“

It’s much more difficult in the UK because you don’t have the same level of connectedness to the market. That connectedness can provide you with vital context

40 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

Many companies are effectively trying to establish a new brand in the market, which can be like starting from scratch, building a reputation locally. And there is a bit of a shift in thinking too, when it comes to getting the right company representatives in front of the right clients. Mayo-based CBE supplies EPoS scanning solutions, cash registers and point-ofsale systems. It has been doing business in the UK for five years, and began focusing more intently on expanding its business there as the economic downturn hit Ireland, investing more in the UK business. “CBE is a strong brand here in Ireland but was relatively unknown in the UK and it took a lot of networking with the right people to get them to know us and have confidence in our products,” Concannon explained. Gaining that confidence can be a long process. Concannon said it took CBE longer than it initially thought to gain customer trust but the payoff has been a thriving business in Britain. The company has noted a few differences in how things are done. “In Ireland senior people – decision-makers – in a company are quite willing to deal with junior people or middle management; in the UK, senior people only want to deal with senior people.” However, once the differences have been tackled, there are benefits to be reaped. Access to different skills is also an advantage of moving into new markets, and that is no different in Britain. In Brite:bill’s case, the company gained access to different design talent. “There are some great and creative designers in Ireland, but there were some specialities that I needed to get access to and a lot of those were based in London,” Coleman said. The UK market can also yield benefits for startups. Software company Effective has made the UK an equal priority from the

Netwatch managing director David Walsh: says move outside Ireland was inevitable

outset. “When we launched our product, we targeted the UK with our initial web advertising campaigns at the same time as we launched in Ireland,” said managing director Darragh Geoghegan. “Until recently, we conducted all UK sales direct from Ireland. We have now hired directly within the UK, but initially trying to identify local area leads and promotion opportunities was difficult.” The company has linked in with the current move towards cloud service, providing software to help firms manage their health and safety requirements, cutting their administrative costs in the process. Even as a startup, accessing the British market didn’t require a prohibitive outlay. “We supply a software as a service solution so 95 per cent of our business and support is all conducted online but even the UK local availability was also an issue,” said Geoghegan. “Availability of serviced

TRADE

STORIES MauriceLynch, NatheanTechnologies

offices, virtual offices and international VoIP numbers allowed us to give the impression of international structure while we were growing and still not quite at that stage of development.” Companies who want to follow in the footsteps of successful firms should be pre-

pared to put in the effort, with research of the market pinpointed as a priority before investing heavily in attempting to grow your brand in the British market. “It sounds obvious but is often something overlooked by many companies,” said Geoghegan.

And just because the market is familiar, it doesn’t mean it will be easy. “Be prepared for the long haul,” said CBE’s Concannon. “Be prepared to invest money and the time of experienced people in developing your brand. The good news is this investment is worth it.”

Thebusinesswassetupin2001andI joinedin2005astechnicaldirector, becomingCEOin2009.Wesellagile businessintelligencesolutions.Our toolsprovidedataanalysisandreportingacrossactivitiessuchashuman resourcesmanagement,finance,pay rollandsoon,tohelpbusiness managersmakebetterdecisions.We employ15peopleandhaveaturnover ofinexcessof¤1million. Upuntil2010wehadbeenfocused mainlyontheIrishmarket.Inthatyear wemadeabigpushintoexportsand justthreeyearslaterexportsaccount for60percentofourrevenues.Wehave clientsintheUS,CanadaandHolland buttheUKaccountsforthelion’sshare. Referencingiseverythinginour businessandthefactthatwepickedup someverybig,bluechipUKclientsvery quicklymadeahugedifference.Wesell acrossthreesectors–public,education andcommercial.Wehaveclientssuch asPlymouthUniversity,JohnLaing ConstructionandUKgovernment departmentsbuyingoursoftware,and that,inturn,opensthedoortomore sales. IfindthatintheUKyougetavery directyesorno,ratherthanthe‘slow no’yougetathome,whichcanbe frustrating.Youcandoallthedesk researchyouwantwhenitcomesto breakingnewmarketsbutthere’sno substituteforshoeleather.It’sactually gettinginfrontofpeoplethatcounts.

Netwatch: a successful merger of two cultures Remotemonitoringcompany Netwatchhasbeenoperatingin theUKforfiveyears. Thecompany,whichisbasedinCo Carlow,specialisesinremote videosurveillance,aimingitself mainlyatcommercialproperties. Establishedherein2003,ithas grownovertheyearstoemploy 100peopleinIreland,with 20staffoutsidethecountry. FormanagingdirectorDavid Walsh,expandingintheUKwasas

muchaboutbuildingtheright teamthatunderstoodtheNetwatchcultureasitwasgettingto gripswithhowtodobusinessin theUK. "Thebiggestchallengewas certainlyfindingtherightpeopleto integratetheUKculturewithour internalNetwatchcultureand we’vebeenreallyluckytohave builtsuchateamthere,”hesaid. Crucialtothecompany’ssuccess intheUKwasbuildingupanet-

workofinstallerswhowouldallow Netwatchtoofferthesamelevel ofserviceresponseasitdidin Ireland.ThiswaskeytoNetwatch’suniquesellingpoint. “ThesecurityindustryintheUK isextremelydifferenttothatin Irelandasithasbeencommoditizedtotheextentofprovidinga verylowlevelofservice,”Walsh said.” Assuch,themarketwas extremelyreceptivetoNetwatch’s

high-valuepropositionparticularly thecompletemanagedservice solution.”Ithaspaidofffor Netwatch.Anditssuccessinthe UKhashadknock-onbenefitsfor theCarlowoperation. Thecompanyiscommittedto creatingjobsatitsCarlowbase and,regardlessofwhereits businessexpandsinto, theservicefulfillmenttakesplace throughitsspecialistsinits communicationhub.

Walshadvisesthoseconsidering enteringtheUKmarketthatwhere possibletheyshouldworkwith existingcustomersinIrelandwho haveoperationsintheUK. “Theywillalreadybefamiliarwith yourproductorserviceanditwill provideyouwithasofterintroductiontothemarket,”hesaid. “Network,listentoandtakeadvice frompeople alreadyexportingto theUK,thereisagreatnetworkof Irishexportcompanies–useit!”

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 41

CONSTRUCTION

Developing a future overseas While the Irish construction industry remains bleak, firms are jostling to snap up lucrative opportunities across the Irish Sea, writes Sarah Townsend

ince the downturn, a string of Irish architectural and engineering firms have set up shop in cities across the UK. These include Reddy Architecture – headed up by Tony Reddy, a founder member of the London-based Academy of Urbanism – and O'Connor Sutton Cronin (OCSC), an engineering firm targeting the London residential market. They join a clutch of Irish firms with wellestablished UK practices, such as Scott Tallon Walker, which entered the UK in 1974; John Sisk and Co and Bennett Construction – both of which moved to the UK in the 1980s – and multidisciplinary PM Group, which set up in Birmingham in the 1990s. The latest figures from Ireland’s Central Statistics Office reveal that the value of construction output dropped 2.9 per cent in the second quarter of 2012, a 7.1 per cent drop from the same period in 2011. The Construction Industry Federation has estimated that total construction output in Ireland will be around ¤8.4 billion for the whole of 2012, representing a drop of ¤30 billion since 2006. As a result, gross exports from companies targeting the UK construction sector will exceed ¤1 billion by 2016, predicts business support agency Enterprise Ireland.John Hunt, the agency’s senior market advisor on construction, says: “The past five years have seen significant growth in the number of exporting companies, and

the number of exports to the UK. This is impressive when we consider the inherent difficulties of winning new work and sustaining new clients.” Hunt says Irish firms with an industrial engineering capability have prospered at a time when investment in power distribution, rail infrastructure, data centres and, more recently, London’s prime residential, has held firm. The development outlook for prime residential in London is certainly healthy: the pipeline of luxury schemes alone is worth £39 billion, according to consultancy EC Harris. It is no surprise, then, that firms are jostling to snap up lucrative opportunities across the Irish Sea. But to succeed in what has become a highly competitive market, they must demonstrate a unique offer and strong track record. “The UK is a tough market,” says John

“

The development outlook for prime residential in London is certainly healthy: the pipeline of luxury schemes alone is worth £39 billion

42 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

O’Connell, managing director of PM Group UK. “With the economy as it is there are far fewer opportunities. The volume of work has halved and the number of firms going for one contract is huge.” PM Group employs 1,800 people across the world, 300 of which are UK-based. Its core business is providing architectural, engineering and project management services to the biopharmaceutical and food manufacturing industries. When it entered the UK in the mid-1990s, Birmingham was its first port of call as that was where many existing clients were based. “The challenge was to grow our business in a mature market already served by a large number of competitors,” says O’Connell. “We focused on our strengths; one or two business areas where we knew we could provide a world-class service, and, at first, did not diversify much outside that.” PM Group’s big break came in 2007, when it acquired London-based Devereux Architects, one of the UK’s top 20 architectural firms. The company operates across a range of sectors, including healthcare, education, research, and commercial and residential development. PM Group’s other UK employees are located in Birmingham, Southampton and Manchester. Now, around 15 per cent of the group’s total income comes from the UK – around £20m – and it is currently working on a huge masterplanning project for the Adenbrook biomedical campus outside Cambridge.

PM Group is not the only Irish firm to have bought into a UK practice to strengthen its offer. John Sisk & Co moved to London in 1980 and expanded its business in 2004 by acquiring Bideem, a £33m-turnover civil engineering contractor from Bristol. However, Eoin O’Morain, a director at Scott Tallon Walker, says few Irish practices can afford to buy out a UK business. He suggests partnering with well-known firms on specific projects. “It is possible to work with established firms on one-off projects that are not large enough to base a practice on but require a local practice to navigate the UK’s complex regulatory system,” he says. Reddy Architecture is one practice that arrived in the UK at a decidedly shaky time, in 2010, but is snapping up high-profile residential work from big-name developers such as Barratt and Berkeley. The firm was seeking new sources of work as the Irish market became increasingly depressed, says Reddy’s UK managing director Calbhac O’Carroll. However, the firm, which already had offices in Russia, the US and the Middle East, also saw London as a good base from which to expand its global reach. “So many international investment decisions are made from London,” says O’Carroll. Two years later, it has five architects in the London office but no plans to open in the regions. “London is where the investment activity is, driven to a large extent by money abroad,” says O’Carroll. He admits it has been challenging to break into the UK, particularly at a time when things are far from booming. Firms need reserve capital to cover the high costs

AIB TRADE CHAMPION

Top: Bexhill High Academy, a secondary school designed by PM Group-acquired company Devereux Architects. Above: University College London Hospital Proton Beam Therapy Centre, designed by Scott Tallon Walker Architects, one of the architects involved in a ¤250m scheme due to be delivered in 2017

of doing business in London – rent, travel, business rates – and fund a typical threeyear marketing period. He says the London market is “highly segmented and specialised”, with hundreds of rivals depending on the size and nature of the project. Fees, in particular, are competitive. “Architects back in Ireland would take the view that fees are horrendously low at the moment, but they’re not much better in London.” While a handful of firms are clearly making headway in breaking the UK, not all

have succeeded. Last March, Irish architects Austin-Smith Lord shut its London office and all seven staff were made redundant. Later, HKR, once Ireland’s biggest architectural practice, went into receivership and closed three of its six offices, including Manchester. The London office remains open. Hunt says the number of new companies targeting the UK was at an all-time high between 2008 and 2010, but this has tailed off in the past two years. He says: “Today, Irish companies are most likely to target UK construction with software or energy management solutions; a sign, I believe, that companies who came to the UK during Ireland’s most difficult days either conquered with a world-class offer or failed to adapt.” Sarah Townsend is professional and legal editor of Property Week

SISK

OneofthebiggestbusinessnamesinIreland,SiskGroupisafifth-generation familybusiness.FoundedinCorkin1859by22-year-oldplastererJohnSisk,it hasgrownintoaninternationalconstructioncompanywhichhasdiversifiedinto healthcare,consumerproducts,stonequarriesandpropertyinIreland,theUK, theMiddleEastandbeyond. Thoughthebusinessspansthreecenturies,andemploysinexcessof2,000 people,thefamilymaintainithasstayedtruetofounderJohnSisk’svisionof providingexceptionallyhighlevelsofconstructionexpertiseandcustomer servicebyemploying,trainingandmotivatingcapablestaff. ThebuildingfirmJohnSiskfoundedremainsatthecoreofthenow internationallyandsectorallydiversifiedgroupofcompanieswhichmakeupthe SiskGroup.ItsUKbusinesswassetupin1984withoneofitsfirstjobsa£2million officeblockinWoking.By2000,theUKbusinesswasturningover£100million andtodayitisa£350million-plusbusiness,employingaround450staff. SiskhastwomainoperationalbasesontheUKmainland,atStAlbansand Solihull.ItalsohassatellitebasesinCardiff,Bristol,ManchesterandGlasgow. ThisyeartheUKwillaccountforoverhalfofJohnSisk&Son’sturnover. TheUKbusinesshasgrownorganicallywithcoreexpertiseinthehoteland residentialsectors.Ithasbuiltupstrongrelationswithkeyclientssuchas DerwentandQuintain.FlagshipschemesincludehotelprojectswithinCounty Hall,severalOlympicprojectsandvenues,WembleyArenaandthedeliveryof London’shighesthotel. Withsignificantlyreducedpipelinesofworkathomeandasurplusofspecialist expertiseatitsdisposal,thecompanyrespondedbyaddingnewbusiness streamswithintheUKinenergy,industrialprocessandcivilengineering. Thesecomplementeditsexistingcorebusinessesand significantlyincreased Sisk’spresencewithintheUKconstructionindustry.Thefirstsuccessfromthis initiativecameintheformofa£40millioncontractatPembrokeinwestWales foracombinedgas-poweredenergyplant(picturedabove)toservethe equivalentofathreemillionpopulation,acontractawardedbyanexistingclient fromitsIrishbusiness.Sisk’sperformanceatPembrokeledtoafurther10 awardsoverthepastthreeyearsgenerating£250mofrevenueacrossCCGT (combinedcyclegasturbine),wastetoenergy,windfarms,industrialprocess anddatacentres. AnotherSiskskill-settocrosstheIrishSeain2008wascivilengineering, whereadifferentmanagementapproachwastaken,thistimebyformingjoint venturesintheUKwithprovenpartners. Theflagshipawardresultingfromthisinitiativewasthe£450millionCrossrail contractbeingdeliveredinjointventurewithSpanishcontractorDragados.This 21kmtunnellingprojectisshortlyduetocommence.Siskhasalsosecured majorroadworksschemesinScotlandand Walesinpartnershipwith Roadbridge.CurrentprojectsatSiskintheUKincludethefittingoutthehighest hotelinWesternEurope,thefirstdesigneroutletcentrewithintheM25,a£35 millioncoffeeproductionfacilityinDerbyshireanda£75millionwastetoenergy schemeinManchester. Sandra O’Connell

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 43

TOURISM

That whisper in the blood The Gathering could be a game changer for Irish tourism – but will British tourists come in their droves? Francess McDonnell reports

f the Gathering draws the extra 325,000 visitors that Ireland hopes to attract this year, tourism chiefs are predicting it could be a huge gamechanger for Ireland’s tourism industry. There are more than 2,600 Gatherings due to take place throughout the country and the year got off to a star-studded start with a Gathering organised by Daniel DayLewis last month. The English-born double-Oscar winner, who lives in Wicklow, persuaded the stars of his latest film Lincoln ,including Sally Field and the director Steven Spielberg, to gather in Dublin to celebrate the European premiere of the film and help raise funds to build a hospice in Wicklow. While the thousands of other Gatherings taking place up and down the country might not attract quite as much publicity, they are collectively creating a wave of excitement about the initiative which aims to be a “festival of festivals”. According to Tourism Ireland, the organisation responsible for promoting Ireland overseas as a holiday destination, overseas tourism business accounts for ¤3.5 billion, or 59 per cent of all tourism revenue. The reason why so much rides on it being a success is that tourism is the largest indigenous industry on the island; it accounts for more than 4 per cent of GNP and employs around 200,000 people. More than half of all overseas visitors to Ireland come from Britain, and the industry is hoping that they will come in their droves for the Gathering. An estimated six million British people claim some form of Irish descent , so it remains to be seen if the lure of the old country is strong enough. But it could be a difficult sell, particularly as Ireland has lost half of its tourism business from Britain over the past five years, according to the Tourism Recovery Taskforce. The most recent tourism figures show there was a sharp fall in the number

of British tourists to Ireland in the three months to November of last year. Overall visitor numbers fell by 3 per cent to 673,700. According to the Central Statistics Office, this coincided with a rise of nearly 6 per cent in the number of visitors to Ireland from other European countries. American visitors were up slightly too to 269,500, during the same period. The number of Irish people visiting Britain has also fallen consistently in recent years from a high of more than 2.9 million in 2007 to just over 2.5 million last year. This drop is unlikely to cause much upset in the industry there as, thanks to the Olympic effect, Britain is set to reach its forecast of 31 million visits last year. The fall in the number of British holidaymakers to Ireland, however, has alarmed the hospitality industry. Niall Gibbons, the chief executive of Tourism Ireland, says one of the factors Ireland has to compete against are British stayat-home destinations. The fall-off in British tourists to Ireland last year also in part reflected where the country’s economy was and the low consumer confidence that prevailed in Britain. Gibbons says market research also suggests a perception among some British holidaymakers that Ireland has remained an expensive location to visit despite the general demise of Celtic Tiger prices . But will the Gathering imbue the estimated six million people in Britain who claim some form of Irish roots with a fresh desire to visit their ancestral homeland? “The relationship between Britain and Ireland has never been better, the Ireland brand is very strong and I do believe that the Gathering is a great opportunity for us,” says Gibbons. “We’ve also got a new plan this year which will help us get our compelling message across about what we have to offer in

44 |THE IRISH TIMES Ireland-UK Trade | February 13, 2013

Ireland. We aim to grow the number of British holidays by 5 per cent per annum to 2016.” Tourism Ireland research shows that British holidaymakers view Ireland as a short-break destination but that it scores poorly on many of their key holiday motivation factors.

“

The relationship between Britain and Ireland has never been better, the Ireland brand is very strong and I do believe that the Gathering is a great opportunity for us

One of the barriers it needs to overcome to convert potential British holidaymakers into visitors to Ireland is that there are “simply other places they would rather go”. “Ireland can offer all the experiences they want. We just need to tell British holidaymakers that Ireland has what they want and we are going to do that by identifying potential visitors by particular groups and matching their needs and interests,” he says. These groups include the Social Energisers (young, fun-loving urban adventurers), the Culturally Curious (over-45s who want to broaden their minds) and Great Escapers (younger couples who want to get away from it all). Some 85 per cent of British tourists fly to Ireland and in recent years fewer than 20 per cent travelled by sea or brought their own car. But perhaps the Gathering will change that.

TRADE

STORIES

MichaelWright,RivieraTravel

Tim Fenn, chief executive of the Irish Hotels Federation (IHF), believes the Gathering will re-energise Irish tourism “but it is about much more than that. The Gathering will also give people an opportunity to restore lost connections and create a new sense of community,” he said. “We do need to give holidaymakers new reasons to visit Ireland and we need to get the right message across that Ireland is great value, especially to visitors from Britain. There was a time when Ireland might not have been as competitive as it is now,” he said. The IHF also believes the initiative could help boost corporate bookings, which are showing signs of recovery particularly in the Dublin area. “There is a huge business connection between Ireland and Britain, and that is helping to underpin the recovery in business-visitor numbers that we are seeing.

The close relationship between the two economies is definitely driving the recovery in business travellers,” says Fenn. A spokesperson for the Association of Irish Professional Conference Organisers (AIPCO) says feedback from its members suggests the Gathering in itself will not boost attendance levels at professional conferences this year . She said at a purely corporate level it may encourage some organisations to think outside the box and host special events but believes the Gathering is more consumer orientated. “Generally important conferences are planned three to four years in advance so I don’t think it will be of massive importance,” she said. However a number of companies including Google, Facebook, KPMG and PwC have confirmed they intend to hold international alumni events in Ireland, which

Film director Steven Spielberg, head of Fox Filmed Entertainment Jim Gianopulos and actors Daniel Day-Lewis and Sally Field at the Irish premiere of Lincoln at the Savoy Cinema, Dublin. Photograph: Eric Luke

IsetupRivieraTravelin1984.We specialiseinescortedtours,havea turnoverof¤100millionayearanda UKstaffof74. Acoupleofyearsagowenoticed that,particularlyforlong-haultours,an awfullotofthepeopleonthemwere fromIreland.Theywerejusthoppingon aplaneandjoiningus becauseour pricesweresogood.In2011weopened anofficeinDublin. BecauseofthesizeofourUKmarket weareabletodothingslikecharterour ownrivercruisersforsixmonths– thingsyouwouldn’tbeabletodoin Irelandbecausethenumbersjustaren’t there.Itmeanswecanofferverylow pricestotheIrishmarket. Thedownturnmeantwewereable tostaffourDublinofficewithpeople whoareexpertintheIrishtravel market.Therearejustthreestaffthere atthemoment,butthatwillgrow. I’mIrishmyselfandmycustomerservicemanagerisIrish,soinrelationto recessionweknewthattheIrishmight bedownbuttheyweren’tout.TheIrish liveonacold,darkisland,justlike peoplefromtheUK,andtheywanttheir holiday. Wethoughttoothatthetimetoget intoanymarketwaswhenthingsareat theirtoughest,andbethereforwhen themarketcomesback.Wewereright: ourIrishbusinesswasprofitableinits firstyear.

could bring 1,000 international visitors. But not even these promise to rival the Gathering hosted by Daniel Day-Lewis in Dublin with his Hollywood friends. His event shone a glamorous spotlight on the initiative and might also have inspired some of his fans in Britain to look at Ireland with a view to visiting for the first time or returning. As Day-Lewis said: “By answering that whisper in the blood and returning to the source, they shall also be investing in the future of this uniquely magnificent country.”

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 45

Leading the Development of Ireland’s Farming and Food Industry Teagasc, the Agriculture and Food Development Authority, supports science based innovation in the agri-food sector and the wider bioeconomy to underpin proﬁtability, competitiveness and sustainability. Through Research (food and agriculture) and Knowledge Transfer (education and advisory) Teagasc delivers six programmes:

Animal and Grassland Programme ■ Animal and Bioscience ■ Grassland Science ■ Livestock Systems ■ Dairy ■ Beef ■ Sheep ■ Pigs

Crops, Environment and Land Use Programme ■ Crop Science ■ Environment ■ Horticulture ■ Forestry

Rural Economy and Development Programme ■ Agri-Food Economics ■ Rural Sustainability ■ Farm Surveys ■ Farm Management ■ Rural Development

Food Programme ■ Food Bioscience ■ Food Safety ■ Food Technology and Quality ■ Technology Transfer to Food Companies

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Improve the competitiveness of agriculture, food and the wider bioeconomy Support sustainable farming and the environment Encourage diversiﬁcation of the rural economy and enhance the quality of life in rural areas Enhance organisational capability and deliver value for money www.teagasc.ie

EDUCATION

The smart approach

Claire O’Gorman. Her students got interested when she made lessons fun more interested they were, and they got so excited and looked forward to doing Irish if you made it a bit more fun. Then I went looking for resources, but there weren’t any around,” she says. The idea remained dormant until O’Gorman moved to London to teach in September 2011, when she decided to “seriously” look into developing Smarty Cat Games, soon bringing a local graphic designer on board to help draw up the 10-game box-set. The first run of “Cluichí Gaeilge”, made in Ireland and covering the 10 themes covered in the national curriculum for Irish in schools, was produced last June. “Schools were very interested,” she says. The second production run was manufactured in Asia, because O’Gorman could not then afford to pay for the quantities needed by the Irish printers. “But it took a lot longer than I had hoped. I only got them in November. So far, so good.” The box-set sells for ¤150, though O’Gorman is working to develop selling the games individually to make it more affordable for parents to buy one and help their children with their lessons at home. For now, direct selling is her chosen route. She was put off by the margins sought by retailers. If the games can successfully help to teach Irish to Irish kids, then variations could be used to teach other languages. “I would love to change it into different languages. Sell English ones to China, for example. There are so many places to take it.”

A London-based teacher has developed a fun way to teach Irish to children, writes Mark Hennessy

laire O’Gorman works as a supply teacher in south London, filling gaps in schools’ timetables. In the evenings in her Clapham flat, she works to build a business back in Ireland that will help to teach children Irish through board games. The germ of the business idea came during time at the blackboard in St Mary’s National School in Blessington, Co Wicklow. “I found that children found Irish quite boring and they weren’t that interested. “The more I played games with them the

TRADE

STORIES MaryMcKenna,LearningPool LearningPoolhelpsorganisationsthat needtotrainlargenumbersofpeople quicklyandcosteffectively,sotheycan deliverbetterservicestotheircustomers. I’moneoftheco-foundersofthe business,whichwesetupinLondonin 2006andthenmovedtoDerry,becauseI waslivingthereatthetimeandmy businesspartnerwaslivinginDonegal,so itmademostsense. Todayalmost100percentofour clientsareintheUK,inbothpublicand

UPCOMING EVENTS February 26th BreakfastSeminar,Dublin: InsolvencyRegimesinBritain &Irelandsponsoredby RSMFarrellGrantSparks. Toregistercontactconor. hynes@britishirishchamber.com

privatesectors.Itjustmademostsenseto targettheUKbecauseofthesizeofits public-sectororganisations.Oneofour clientsisBirminghamCityCouncil,which has57,000employees.Itmakessenseto focusyoureffortsonplacesyouarelikely togetthebestreturn. Wehaveaturnoverof£3.5 million[¤4.1 million]andastaff of55,includingfour peopletakenonsincethenewyear.It’sfair tosaytherecessionhasn’thamperedour businessatall.

February 27th BreakfastSeminar,Dublin.A QuestionofTalent?-Womenon BoardsinIrelandsponsoredby O'RourkeReidLawFirm.Details frommtobin@orourkereid.com

Seeukti.gov.uk

March 6th UKTIInboundMarketInsight visittoDublinatBallsbridgeHotel.

March 13th BreakfastatRDS:ThefutureofTV. Tobook,seerds.ie

March 11th BritishIrishChamberSpringLunch, London.Detailsfrommichael keaveney@britishirishchamber.com

Peoplestillneedtrainingfortheirstaff butarekeenerthanevertogetitascost effectivelyaspossible,sotherecession hasprobablyhelpedus. Thatsaid,I’vebeenbacklivinginLondon forthepastyearnow,andthere’svery littleevidenceofrecessionthatIcansee.It seemstobebooming. Wehaveasmallamountofbusinessin Ireland,andI’mhopingtogrowthattoo thisyear,withacoupleofpublic-sector contractsinthepipeline.

April 10th-12th Corkmeetbusinessgathering.For moredetails,seecorkmeet.ie May 16th BTTowereventinaidofTheEllen MacArthurCancerTrustand Barretstown.Ticketscost¤50. info@emcancertrust.org

May (date to be confirmed) Golfouting,Dublinsupporting Barretstown.Detailsfrom yve.odriscoll@ britishirishchamber.com June 7th BritishIrishBusinessandRaceDay, Leopardstown.Detailsfromyve. odriscoll@britishirishchamber.com

THE IRISH TIMES Ireland-UK Trade | February 13, 2013 | 47

Talk to our British Irish Trade team today: Michael Collins, Senior Manager - New Business Phone: +44 (0) 207 776 3003 Email: michael.p.collins@aib.ie www.aibgb.co.uk

Our business is business banking Allied Irish Bank (GB) is a trade mark used under licence by AIB Group (UK) p.l.c. (a wholly owned subsidiary of Allied Irish Banks, p.l.c.), incorporated in Northern Ireland. Registered Office, 4 Queenâ&#x20AC;&#x2122;s Square, Belfast BT1 3DJ, Registered Number NI 18800. Authorised and regulated by the Financial Services Authority. 002 ITA 02/13