Posted on Thursday 10 December 2009 byUlster Business
If there's one area of the Northern Ireland economy which has managed to shrug off the worst effects of the recession over the last few months it's the retail sector in the border regions. Newry in particular has benefited from the rush of shoppers from the Republic of Ireland, or ROI, taking advantage of the advantageous exchange rate and, while this area of its economy has grown, there is also a growing case for businesses from ROI setting up a second base in the border town. David Elliott spoke to two of the main backers of this initiative to find out more.
It's said location is everything. In the case of Newry, this motto rings true to the ringing tone of the city's cash tills counting up the money being spent by shoppers taking advantage of the lucrative hop across the border which the collapse in the value of sterling has opened up.
Not that the Republic's economy can easily shrug off this loss of income given that its economy is arguably going to take longer to recover from one of the most severe periods of recession the region has witnessed in recent years. Perversely, the Republic's use of the euro currency system means that despite this disparity in economic health existing between it and Northern Ireland, it doesn't benefit from a weaker currency.
But while last Christmas was a bumper year for the shop owners of Newry as southern shoppers travelled for a bargain, the effects of 12 months of recession will have diminished the takings this year.
Despite this prognosis, the head of Newry-based property company and owners of the Quays Shopping Centre Parker Green still expects a bumper year.
"There's no indication it's going to be any different to last year" said Dr Gerard O'Hare in an interview with Ulster Business in the company's Newry office. "We're achieving year-on-year growth. We're bucking the trend. While the rest of the world is down around 5% to 15% in terms of year-on-year sales, we've been 15% to 25% up.
"It just doesn't make sense to buy something in Dundalk you could buy in Newry at half price."
While he concedes this has much to do with the exchange rate, he also believes the pricing policy of southern retailers has also driven shoppers north.
"We're getting the benefit of improved infrastructure, the exchange rate and a historically inflated pricing policy in the Republic. They (retailers) have priced themselves out to the market."
This is not to say Dr O'Hare wants to pillory southern retailers, far from it. Instead he's looking to work more closely with them and other businesses from the region.
"What is important is that we try and work together to make the island economy more competitive" he said. "A more holistic approach by both the Irish governments and business in terms of viewing the opportunities available in the north can make both of us more competitive on world markets thereby making the island economy more competitive."
As the owner of shopping centres in the Republic as well as in a number of other countries around the globe, Dr O'Hare is more qualified than most to comment on the subject and, despite his vast experience in Great Britain, the US and throughout Europe, he still holds a strong flame for his hometown of Newry as a city of growth.
Indeed, so keen is he to encourage businesses in the Republic to set up a second base in Newry and take advantage of, not just the retail trade which is slipping through their fingers, but also the benefits of having a base in the UK, that he recently took part in a presentation in Dublin entitled "Opportunity Newry".
The event, designed to highlight the benefit of having a base in both jurisdictions, heard Mr O'Hare, along with Alastair Hamilton, the CEO of Invest NI, Feargal McCormack of FPM Accountants and other senior members of the local business community, present the Newry case to business people in Dublin.
"From the Republic's point of view we have the ability to reduce their cost base and can open up the wider UK market to them and make Ireland a more competitive economy through collaboration" that's not patriotism or politics, that's common sense."
Feargal McCormack is also keen to point out the financial benefits that can be found for southern companies having a base in Newry "believe a number of prominent businesses provide excellent examples of how a two site location (one of each side of the border) can be legitimately exploited to enhance international competitiveness."
Like any accountant, his points are fairly straightforward.
"Southern companies setting up a base in Northern Ireland can utilise creative cash extraction, transfer pricing and group structures to benefit from low Republic of Ireland corporation tax rates, employ staff in Northern Ireland to benefit from lower labour and operational costs and benefit from financial incentives from Invest NI, where ROI is treated as an export market."
But as a Newry man, he couldn't help adding in a little bit of colour.
"Ultimately, (you can) enjoy the unique Newry business opportunity of partnership, pride and passion to make things happen."
Dr O'Hare carries on the grand vision for Newry by taking it back to the youth of the town.
"Newry is a vibrant place, has a great attitude and our political parties locally have shown leadership and left the old prejudices behind.
"Come down to the Quays or the Buttercrane shopping centres on a Friday afternoon and it's like all the schools have broken out for the holidays; they're all there together. We encourage them, we take them in and say 'come and have your afternoon coffee'. We're building romance."
"We say 'this is your city, come and enjoy it'. After all, they're our customers the next day and in the future. When I was growing up in the 70s I wasn't allowed to come down town because there were bombs going off."
It's an alternative view from other shopping centres who aren't overly pleased with the proliferation of teenagers hanging around their sheltered corridors, but one which sits well with the feel good factor which has arisen over the last few years of embedded peace in the region.
It remains to be seen whether this idealistic vision will be enough to tempt more southern businesses to look north, particular as the economy there continues to struggle and if sterling regains strength.
But there's no doubting one thing: the business people of Newry are passionate about making sure no stone is left unturned in taking advantage of any opportunity.