Alastair Hamilton is well aware of the expectations resting on his shoulders.

As well as the normal scrutiny reserved for Invest Northern Ireland, an even brighter spotlight will be shone on the agency over the next four years because the top three priorities in the Executive’s recently delivered Programme for Government depend on the organisation for delivery.

Goals have been set to promote 25,000 new jobs by 2015, to bring £300m of foreign direct investment into the economy, and to provide aid to small and medium sized businesses through a £50m loan fund.

The economic development agency’s chief executive says the targets set out in the PfG and its accompanying Economic Strategy are “stretching but achievable” provided it continues to have full support from the Executive and everybody is prepared to “put their shoulder to the wheel”.

“From my point of view as a leader in this organisation, I want to have a challenge that we can set to people. I want to have a vision that is achievable but actually stretches the organisation,” he told Ulster Business.

In line with the strategy’s twin themes of “Rebuilding and Rebalancing” Hamilton says the document gives Invest NI clarity about the Executive’s expectations and a mandate to pursue both short term and long term initiatives to improve the economy.

Invest NI has already begun promoting jobs through the £19m Jobs Fund, launched earlier this year in recognition that getting people back in work quickly has taken on as much significance as the long term goal of attracting high value jobs to Northern Ireland. Well over 1,000 jobs have been promoted so far and Hamilton says the pipeline of opportunity is strong.

“The rebuilding theme in the strategy totally aligns with the Jobs Fund,” he said.

“We will still be driving foreign investment and indigenous company growth in high value areas and we will still drive export growth. But separate to that there is now a mandate around the short term rebuilding of the economy and that allows us to exist without strategically getting those two things confused.”

Invest NI is currently in the final stages of its own Transform programme, a plan devised following the IREP report in 2009 and which has seen a change in the structure of the organisation, the breadth of its client base, the delivery methods for its support and the speed of its processes.

Hamilton is confident it will enable the organisation to get more from its current resources.

To that end it has introduced a number of new programmes under the banner of “Boosting Business”.

The initiative’s aims are threefold: to communicate more clearly with companies about the support that’s available; to launch new programmes which reflect lower economic growth projections; and to set mechanisms in place to change Invest NI from an organisation that is reactive to one that is proactive.

“This new piece has risks for us, because as a Government development body our mandate is only really to get involved in areas where our intervention will make a difference,” said the CEO.

“Being proactive we might see an opportunity and someone might say down the line that we didn’t need to do it because the company would have done it anyway, and they may question value for money. But in the current economic climate the mandate on me to help drive business and support business is overwhelming, so I’ll deal with those questions if they come.”

Boosting Business is also increasing support for Research & Development in line with the PfG’s aims of encouraging £300m investment by businesses in R&D – including getting 500 companies to undertake R&D for the first time.

While recent figures showed R&D by Northern Ireland-based companies increased by 6% to £344m in 2010/11 and of that the amount attributed to local companies went up an encouraging 27% to £110m, Hamilton believes more can be achieved.

“We still need the Bombardiers and Almacs and Wrightbuses of this world doing the R&D they are doing but we need to encourage many many more small companies to get involved in R&D,” he said.

“We want to open small companies’ eyes to the D element of R&D. A lot of the work we’re now engaged in with small companies is around developing an existing product for a new market or new opportunity.”

Through Boosting Business small companies new to R&D will be able to get up to 75% grant assistance for projects up to a limit of £50,000.

“If you take that combined with R&D tax credits you have the most supportive R&D mechanism anywhere in the UK for small businesses,” adds the Invest NI chief.

With increased reliance on the global economy to drive growth and recovery, Invest NI is also ramping up its support for exports, investing in both its own in-country teams and the funding it provides companies to help them tap into new markets.

It has established full time offices in Dubai and Jeddah in Saudi Arabia and in recent months has hired full-time representatives on the West Coast of the US, South Africa, Russia, Brazil and Canada, and is recruiting for a dedicated trade person in London.

It also now provides free market research for companies on their first visit to a market, will pay for them to spend extra days exploring markets and will joint fund return trips for follow up meetings.

Hamilton believes Invest NI has a key role to play in enabling companies to overcome their fears of international trade and, taking the view that almost every company in Northern Ireland can export to some degree, is adjusting its budget accordingly.

“The trade element of our work generally gets flexed in year depending on the amount of budget we have available. But I’ve said this year we will ring-fence the budget for trade. We’re going to grow that budget year on year because it is important for us, and if that causes pain elsewhere we’ll have to deal with it, rather than using the trade budget as a buffer for pressures that come elsewhere,” he said.

FUNDING GROWTH

Perhaps the most telling measure in the Government’s Programme for Government was the £50m Loan Growth Fund.

It aims to generate £150m of sales growth per year in small and medium sized businesses, safeguarding and creating over 2,000 jobs over a 10 year period.

It will be managed by an independent fund manager and is expected to make loans of between £50,000 and £500,000 available to small businesses in manufacturing and tradable services.

Hamilton says the fund will address a gap in the market for access to finance – complementing rather than competing with bank finance, venture capital and private equity finance.

“This is not to compete with banks,” he stresses. “This is a fund that has been set up to give support to those companies who cannot get access to funding from elsewhere. In that space we expect the majority of those to be unsecured. That is the main reason companies at the present time are unable to get funding from banks. There are a lot of firms out there who want access to loans but can’t provide that security.”

As effectively a “funder of last resort” the terms around the loans will be similar to those for unsecured loans, he adds.

Invest NI intends to finance its £25m share principally through the European Regional Development Fund and has an agreement in principle with NILGOSC – which administers the Local Government Pension Scheme for Northern Ireland – to provide an additional £25m in match funding.

Hamilton believes it is hugely positive that NILGOSC – which previously had little of its funds invested in Northern Ireland – has come on board, but notes their participation does come with conditions.

“To draw NILGOSC in they have a corporate responsibility to ensure growth of the private pension fund that they hold. Therefore they need to be assured they will get a sensible return out of this. What we’ve done is the same as we did on some of the early venture capital funds, we’ve subordinated our funding in there,” he explains.

“At the end of the day we’re not here to make money out of our loan funds or VC funds. Don’t take that to mean we want to lose money. But that’s not the primary purpose of what we’re here to do. The objective for me is to provide funding that allows companies to grow,” he adds.

“This is lending of last resort, this is the highest risk lending you will get to. But the companies need it, so the partner in here who is providing £25m of their money will be assured a return out of this and we will subordinate our funds. It is the best way to make it work.”

Added to its existing Co-Investment and Development Funds the Loan Fund will form part of a £100m fund of funds at Invest NI’s disposal.

The agency came in for some criticism earlier in the year when it was forced to hand some £17m of its budget back to Stormont because it was unable to spend the money in the budget period.

Much of that money was earmarked for projects which have slipped into next year because potential investors have held off on their plans due to economic uncertainty.

It again raised the question of whether Invest NI should be allowed flexibility in its budget to ensure the money is spent on economic development, something Hamilton believes will be increasingly necessary given the changing nature of its support and the returns that £100m under management generates.

“More of my funding going forward, and I think rightly so, depends less on the block and more on us investing money and getting that back and recycling it for economic development. But yet my fixed Budget mitigates against that,” he said.

“Because people are focused on economic development it is viewed as negative when you’re not able to spend that money. What people forget is that the vast majority of our funding requires match funding. I hear lots of people saying we need to be distributing it to small businesses but I can’t just go out on the street and find projects to 100% fund,” he adds.

“I think we need to find a way to allow funds to be managed in a different way if we’re getting equity investments returned to us, if we’re getting loans returned to us, and commitments drop to future years. We need to be able to manage a budget over that longer term. The last thing I can afford to do is think of those commitments that have moved from this year to next year and take my foot off the gas.”

She is talking about the Economic Strategy for Northern Ireland, published by the Executive alongside its Programme for Government to set out its priorities for getting the economy back on track – and then primed for growth.

In light of past criticism about a silo mentality among local Government departments the economic blueprint has been drawn up with input from the departments of Employment, Regional Development, Finance, Enterprise and the Office of the First and Deputy First Minister.

Minister Foster told Ulster Business that because it is an Executive document, it should mean things get done quicker.

“It is very much a living document, the proof of which is that we have an action plan that sits alongside it,” she said.

“It was recognised by Richard Barnett in the IREP report that there was a silo approach to economic development and I agree with him that there is a need to involve all of the departments in Northern Ireland in economic development. That’s why the economy is front and centre of the Programme for Government.”

The strategy’s twin themes are rebuilding and rebalancing – looking at both short term measures to prop up the economy as well as long term goals to make the region more internationally competitive in future.

“Since IREP our focus has been on the need to rebalance the Northern Ireland economy, but there is a huge recognition that the rebuilding piece has to come first. It is about getting people into jobs. While we have over the past couple of years been looking at high value jobs, there’s a piece of work to be done on the lower value jobs because we recognise that not everybody has a PhD or third level education. That’s what the (Invest NI) Jobs Fund is about,” the Minister said.

While Foster is concerned about the significant problem Northern Ireland currently faces with youth and long-term unemployment, she stresses that the unemployment rate of 7.3% should be looked at in the context of far higher rates across Europe.

“What we cover in the strategy is how we deal with the unemployment that we face currently because we’ve gone from 4% in 2008 to 7.3%, which is around the 61,000 mark. It is a significant unemployment statistic and it’s one I wish we didn’t have but it is one that needs to be put in the context that Spain has 21% and ROI has 14%. It is bad but it could be a lot worse,” she said.

With ambitious targets to promote jobs, attract foreign direct investment, encourage more exports and increase R&D activity, the strategy also looks to the future.

The Minister is concerned that not enough local firms are considering exports but she believes the successes of those who are exporting to international markets will show it is the best way forward and will reduce traditional reliance on the public sector.

“I think because we’ve been through 40 years of the troubles and because government had to step into areas maybe they shouldn’t have been in, there is a mindset that if anything happens, go to Government. We have to move away from that mindset and see Government as a facilitator of the private sector. Government facilitates, academia inspires and the private sector essentially delivers for the economy,” she explains.

“We cannot subsidise companies to do work. That is a mindset that Europe is stepping away from with the reduction in Selective Financial Assistance. Therefore our ability to do that is going to be heavily curtailed in future anyway, which is why corporation tax is such an important issue.”

With discussions this month set to tackle the tricky matter of exactly how much the potential devolution of corporation tax would cost Northern Ireland, the Minister is firmly of the view that it would make a huge difference to the economy and lead to a lot of reinvestment by indigenous firms in particular.

“It is amazing what we’ve been able to do in terms of FDI without corporation tax. After London, Belfast is the next biggest city in terms of FDI, which I don’t think people realise. We have 3.8% of the population and 7% of the FDI,” she notes.

“But if my team in the US, for instance, were able to go in and say we have (low corporation tax) as well as the skills, young people, low attrition rate, etc, I think it would really push them through doors they are not getting into at the moment. It would be a great door opener.”

ECONOMIC STRATEGY – KEY TARGETS
• Promoting over 25,000 new jobs
• Achieving £300m investment through FDI
• Pressing for the devolution of Corporation Tax
• Increase value of manufacturing exports by 15%
• Supporting £300m investment in R&D –20% coming from SMEs
• Increase tourist revenue to £625m by 2013.

The arrival of FedEx in Belfast is timely given the local business community is firmly focused on global trade to secure the future of the Northern Ireland economy, writes Symon Ross.

The arrival of a global brand such as FedEx to Northern Ireland was seen as a hugely positive move in the local business world.

The world’s largest express transportation company has established a new facility at Kilroot Business Park in Carrickfergus which it believes will improve connectivity for firms in Northern Ireland doing business with foreign markets.

As well as creating employment for more than 50 people the arrival of FedEx Express to the province is perhaps recognition of the increasing focus that is being put on exports by the local business community and Government alike.

The FedEx investment here consists of both a domestic ground delivery service within Northern Ireland and a FedEx global service using a daily flight from Belfast International to the company’s European hub in Paris, which sorts packages in the middle of the night for delivery.

This will feed into the various international hubs and accelerate delivery times to many parts of the globe, notably North America and Asia, which should enhance the competitiveness of firms doing business with these markets. A next-business-day service will also operate to and from Europe and to the US East Coast, with a two-business-day service to Asia and the rest of the US.

Those services might not sound that impressive in a digital world where people expect instant communication and connectivity, but Enterprise Minister Arlene Foster said the presence of FedEx will add to our inward investment proposition and increase attractiveness to potential investors.

Gerald Leary, President of FedEx Express Europe, Middle East, Indian Subcontinent & Africa also believes that being directly linked into the FedEx network by the company’s own aircraft will help local firms to reach beyond neighbouring markets and boost economic prosperity in the process.

At the launch of the local operation he told Ulster Business that setting up in Belfast was a natural step for the company.

“The overall global economy has slowed but we’ve found that often that is the best time to invest and expand your business,” he said. “When FedEx started back in the early 1970s it was a soft time in the American economy to start a business, so we see this as a perfect time to invest. The global economy certainly impacts us but we see global trade as the future in continuing growth, and we see that in Northern Ireland.”
Leary joined FedEx in 1974 as a courier, after which he worked up the ranks, spending six years as the Executive Vice President and Chief Operating Officer for FedEx Trade Networks.

Unlike many American executives who land in on these shores, Leary is already very familiar with Northern Ireland. Like many North Americans he has historical family connections to the province and he was in Co Down last year for his daughter’s marriage to a Newcastle native.

He said there has been an overwhelming response to the company’s launch here and is happy to predict that the operation will grow – noting that FedEx started out delivering 186 packages in the US and now handles 3.5 million daily.

“I would say for our start-up here in Northern Ireland this is just the beginning. It is one small step in a long plan to expand our business,” he said.

“Obviously as we grow our volumes we are looking to expand our business and the next step would be bringing a jet into here – we’re optimistic that hopefully that can happen sooner rather than later as the volumes build. As we provide jet services, heavier freight services into and out of the market, again it offers an opportunity for all kinds of businesses here in Northern Ireland and at the same time it is good for us,” he adds.

“It depends on the business demand. If the growth is there, next week we will have a plane. We’re ready to go.”

Belfast International has, he says, been extremely co-operative and professional and its management team is interested in FedEx upgrading to jet services as soon as possible.

Conscious of the work that is happening at the Northern Ireland Science Park and in the local electronics industry, the FedEx chief sees real opportunities for that growth to happen. He expects that it will be the electronics, pharmaceuticals and science-based businesses that rely on moving everything from day to day documents to heavy freight, which will avail of its services.

While Leary acknowledges there is substantial competition in the courier and international freight markets, he believes FedEx’s reputation for good service will stand it apart.

“On the people side of our business, we have an outstanding staff who are highly trained, and we are very loyal to our people – we treat them very well. From a service standpoint we focus on customer experience and it goes far beyond just picking up and delivering the package. That’s one of the things that truly differentiates us,” he commented.

“We’re looking now at how to grow the business and expand. That’s our main focus right now. It is very much dependent on how we grow our business. We have some expert sales executives on board and we are very optimistic about how things are going to grow.”

FedEx Fast Facts

Federal Express was founded in 1971 and a corporation was created in 1998 as FDX Corporation and became FedEx Corporation in January 2000. Headquartered in Memphis, Tennessee it has revenues of $39.3bn and more than 290,000 staff worldwide looking after 8.5 million shipments for express, ground, freight and expedited delivery services in more than 220 countries. It serves more than 375 airports worldwide from over 1,000 stations and 10 air express hubs. Across Europe, the Middle East, Indian Subcontinent and Africa, FedEx Express currently serves hundreds of cities and markets with its intercontinental and international express service. Home to the biggest hub outside of the US at Paris-Charles de Gaulle, FedEx is systematically building its network across the region through smart, strategic investments. This includes an enhanced next-business-day delivery service from Europe to major US East Coast cities and an International Economy service within Europe. Its 20,000 sq ft Northern Ireland operation, which started in late October, has 52 team members in Carrickfergus and 35 vehicles.

John MacMahon is a long term advocate of cross border business having established his own firm as a cross border practice in 1982 with offices in Dundalk and Newry. Just recently the firm has added a Belfast office to its network, which offers the same cross border expertise from the North’s capital.

One of his early case studies of cross border success is John Boyle, MD of the now billion pound business Boyle Sports. With the support of John MacMahon & Co, John Boyle took one betting shop in Northern Ireland in 1989 and turned it into one of Ireland’s largest independent bookmakers with 160 retail shops across Ireland.

For John and the hundreds of clients he represents, cross border trade is a fact of life rather than a strategic plan and he believes all Northern Ireland-based firms should be looking to the market on their doorstep to enhance their businesses prospects.

He says: “To ignore a marketplace that’s four times the size of Northern Ireland because of fear of the unknown could be short sighted. There is a common misconception that it’s expensive to do business in the Republic when in fact it can be the opposite. With the collapse of the Celtic Tiger, business rates and general overheads are comparable to Northern Ireland, employer costs are less than Northern Ireland, and there are favourable tax advantages for cross border businesses.

“Over 50% of our clients already operate on a cross border basis and for the other half, part of our role is to educate clients about the positive impact that exports to the Republic can have on their business.”

For some businesses, cross border trade is taken as a given – particularly in border locations like Newry.

“We have one food service client based in Newry and two of his largest clients are in the Republic, so he’s exporting without really even thinking about it. For other businesses who want to export, starting with ROI is a way to test the ground, learn from it, set up the appropriate internal systems, as a stepping stone to European export,” comments John.

While he is quick to say there is no set ‘one size fits all’ business model, in general terms the most advantageous position for Northern Ireland firms is to incorporate the company in the south to get access to the 12.5% tax rate – although management and control must be exercised in that jurisdiction to qualify. However, depending on the level of business being done in each jurisdiction, for some Northern Ireland firms it may be better to open an ROI branch which can also gain from the lower tax rate.
There are also a number of support packages available from Intertrade Ireland and Invest NI for manufacturing and tradeable services business with export potential.

John is a huge advocate of a cross border approach, but he admits there are of course potential pitfalls, not least with the foreign exchange risk.

“While we do have some clients who sell in Sterling – and there’s nothing to prevent that – in general, customers would prefer it if the business took the exchange risk,” he says.

While changes have been made to company law in recent years and the interaction between taxes North and South, anomalies continue to exist which penalise cross border businesses and these are issues John and his firm continue to challenge.

The firm successfully lobbied the Irish Government to remove section 44 of the 1999 Company Act which required Northern businesses setting up firms in the Irish Republic to appoint an Irish director resident in the 26 counties or hold a substantial bond to the value of €25,000 (requiring a payment of €1,800 every two years).

“When dealing with clients’ interests we come up against things like this regularly,” says John. “We’re currently concerned with difficult pension regulations for cross border workers and we’re communicating with senior civil servants in Dublin and London to achieve equity. We credit our firm as offering ‘more than just the numbers’ and these are the kind of issues we will continue to challenge for the benefit of our clients.”

For more information contact John MacMahon & Co, Belfast, tel 028 9051 7077.
www.johnmacmahon.com

They say in business that timing is everything, and this was certainly the case for Frank Flynn.

His company, Steel Solutions, decided it needed to diversify at almost exactly the same time as Redrock Machinery, a company Frank knew well, went into administration.

The Co. Armagh engineering company had run into financial difficulties after sales from key markets slumped, and at one stage the future looked grim for its 28 remaining employees.

“I got involved the week after it went into administration and came in to have a look at it. We put in an offer in December 2009 and eventually completed the deal in the last week of March 2010,” explains Frank.

“The company Redrock and its brand was not completely new to me and it wasn’t by accident that we were the people who bought it.”

Indeed, Frank was the manager of Redrock in the early 1990s and having come from an engineering background himself he saw a strong opportunity to turn the business around.

“Steel Solutions needed to diversify in some direction because we were involved in structural steel and waste machines, and both of those businesses at that point were at a very low point. We did have some contracts on the structural side which we knew would carry us through 2010 and 2011 but beyond that, both from the planning office and the whole construction sector, things were looking quite bleak. So we were looking to diversify and it was kind of a coincidence that Redrock popped up,” he notes.

“With myself knowing the industry and knowing the business inside out, coupled with the fact that agriculture and food production around the world was looking like it was going to have a positive time for a while, it seemed the ideal thing to buy.”

The company has had an extremely successful first year under its new owners, beating its annual sales target of £5m and increasing its staff levels from 28 to 50 – with a target now set to get back to previous employment levels of 70 people. It has also grown its export sales in key European markets including Denmark, Holland and Finland.

Part of this success has been achieved by refocusing the business towards its traditional strength in the agricultural sector, as well as investing in new products for its range of machinery.

“The brand name Redrock is largely known in the agriculture sector,” says Frank.

“But in recent years it had strayed from that heritage and when you start to take that brand name out into other sectors like construction you get it watered down to some degree. Some of the products had become outdated and the brand had suffered so we needed to address that,” he adds.

With the focus firmly back on delivering high quality cattle feeding and slurry handling equipment Redrock has fine tuned its product range and modernised a number of lines, bringing all of its manufacturing back in house to its facilities in Armagh.

It has modernised the processes for metal preparation, painting and assembly to increase efficiency and improve the quality of its products so it can compete locally and internationally.

“Some of the Northern Ireland companies, including our own, still have some ground to make up to compete with the way that German machines in particular are finished and presented to the market,” says Frank, who adds that investment in R&D to improve products has to be ongoing if it is to stay competitive.

With competitors in places where labour is cheap such as Poland and Lithuania, he believes new product innovation will be increasingly vital to any indigenous engineering company in future.

European sales now account for around 40% of Redrock’s revenues and Frank is hopeful of seeing growth from other overseas markets as it continues to forge export relationships. He expects Redrock will be able to announce further major global export contracts in the coming months.

“Sometimes it is easier to do business in emerging markets where you are not having to fight with 10 other manufacturers who do what you do. But we do see the bulk of our business coming from mainland Europe and into Northern Europe. We have also exported machines to the Southern Hemisphere, to New Zealand and Australia,” he notes.

“There are a lot of factors affecting farmers and the world food market which indicate to us that the demand will be there.”

After surviving it now seems that Redrock is thriving and with plans for further jobs growth that can only be good for the area.

“It is important the company is still here, particularly in a rural area where agriculture and farming is a way of life,” says Frank.

“I am very encouraged by what has been achieved over the past year for Redrock. We now plan to make further investment into our facilities and will remain committed to driving the business forward in the years to come.”

Ulster Business caught up with Carson McDowell’s new Managing Partner Michael Johnston to find out about his approach to business and his plans for growth in a competitive legal market

Michael Johnston is not your stereotypical aggressive corporate lawyer with a bombastic boardroom style.

Previously head of Belfast-based law firm Carson McDowell’s corporate and commercial team, Johnston took over as Managing Partner of the firm in August.

Softly spoken and with a calm, reassuring manner, he would prefer Carson McDowell to be known for its integrity and fair approach to business.

“I hope that our clients and colleagues would say that when dealing with people we are fair to everybody. Obviously you push your own client’s point of view – that is a given – but not to the point where it is totally unreasonable or unworkable,” he told Ulster Business.

“Sometimes people mistake trying to be fair for softness, but usually they realise that’s not the case and get the point very quickly when you make it to them. We try to treat both colleagues and other lawyers in the same way,” he adds.

Described by the Legal 500 as “commercial and trustworthy” Johnston is keen that the traits he values such as integrity and respect permeate down to the lawyers and other staff within the firm. Northern Ireland is, he believes, too small a place for lawyers to just steamroller opposing parties.

“I have been on the corporate finance side of many deals spanning twenty five years plus and I have seen the “car crash” when one party comes out of a deal feeling aggrieved or done over. Generally the result will be a court case or if it is a long term relationship it will not work. To me getting the right deal done in the right way is the key,” he explains.

“I would like Carson McDowell to be known as a firm that is fair to its clients and its employees, but also generally that there should be a feeling that if you are dealing with Carson McDowell you are not going to be ripped off. If there are two points of view to take, yes, we will always push our client’s side. But there is often a point which you may not be able to go beyond if the deal is to work out.”

Carson McDowell justifiably claims to be Northern Ireland’s largest commercial law firm. It has more lawyers working across a wider range of disciplines than any other law firm in the province – with 59 lawyers and over 100 staff.
It also advises more than a third of the companies listed in Ulster Business’s list of Northern Ireland’s Top 100 companies, as well as many leading public institutions and private individuals.

In the past year alone it has been appointed to advise NAMA, Royal Mail Group, Bord Gais, NIE and Translink, while also working hard to retain its core clients in what is an increasingly competitive market.

COMPETITION

Johnston explains that in the current economic climate clients are scrutinising what they get from professional service providers, which for law firms means they have to demonstrate that they are adding value.

“The days are gone when lawyers can just sit and wait for clients to walk in through the door. This suits us as we have always sought to be very proactive in terms of spending time with our own clients and getting to know their business, their strategies and becoming much more a part of their advisory team,” he says.

“What I would really like for Carson McDowell is that if there are any major decisions being taken in Top 100 companies that we are part of that decision-making process. We’re there when the strategy is being formed, not being brought in just to document it,” he adds.

A closer relationship means lawyers get to know a client’s organisation, its business plan, its objectives, and can engage in mutually beneficial arrangements such as training or sending lawyers on secondment to clients, allowing them to get a better picture of the issues on which the client most needs legal advice.

While he agrees there is a legitimate point at which firms have to reduce prices in line with the market, Carson McDowell isn’t keen to follow some other firms who he believes are effectively buying market share by offering unsustainable prices to win business and subsidising those contracts with higher fees to other clients.

“If someone is determined to buy market share then it is very difficult to respond other than by reducing your own rates, but that is not always in the client’s interest in that it may become unsustainable for the right level of lawyer to do their work. We don’t want to sacrifice our reputation for a quality service, so what that means for firms like ours is that we have to look very carefully at what tenders we are going in for and what type of work you are structuring the firm to do because a huge amount of time can be wasted going for a tender or client which we are simply not going to win because someone is determined to buy that piece of work,” comments Johnston.

The sophistication of the purchaser often determines whether they look at more than just price, as does the relationship between the pricing arm of an organisation and the part to which the service is being delivered. With most organisations, particularly those in the quasi-public sector putting every contract out to tender or re-tendering every three or four years, being able to demonstrate added value has become increasingly important.

CHANGE

Johnston believes that there has been more change in the Northern Ireland legal market in the last five years than in perhaps the prior couple of decades.

While that has meant more competition the firm has also benefited from the increased mobility that competition has encouraged.

“When you came into this profession 20 or 30 years ago that was it, you came in to a firm, you stayed with the same firm and never moved. I don’t think that’s healthy, it was too stagnant. So it is good to have movement. We have benefited greatly from people from other firms joining us, particularly those who have trained and qualified in blue chip firms across the water and are dual qualified, allowing us to service clients’ needs locally and further afield. We like the blend of growing our own talent mixed with lawyers who have trained in leading City of London firms,” he says.

“Unlike most of our competitors, we haven’t had to lose any staff through recessionary reasons,” Johnston notes, adding that the firm now has more lawyers than they had at the start of the recession.

Michael says Carson McDowell is keen to keep developing talent within the firm and continues to take on apprentices. Historically the majority of apprentices remain with the firm and are encouraged in all aspects of career development. He cites the Arts & Business Board Bank – where young executives sit on the board of an arts organisation – as a particularly useful tool in giving up-and-coming staff strategic experience.

An art lover and keen collector himself, Michael sits on the newly-formed board of Arts & Business Northern Ireland, an organisation which works to spark creative partnerships between commerce and culture. Along with Rosemary Carson, one of the firm’s Commercial Property Partners, he also judges the annual Carson McDowell prize given to art students at the University of Ulster. This support for local artists is one way the firm seeks to demonstrate that it is part of Northern Ireland society and not just the business community.

GROWTH

Michael Johnston’s vision for the future is to ensure the firm keeps on growing and remains the largest independent law firm in Northern Ireland.

To that end it has invested in attracting and retaining lawyers across every area of legal expertise.

There are several areas where the Managing Partner expects particular growth. Among them are litigation, defamation and commercial work – both because people generally have become more litigious and because many others are re-reading contracts signed at the height of the economic boom three or four years ago and not liking what they find.

Banking will also continue to be a focus, particularly as the firm is on the panel for NAMA, and while corporate finance deals have been in relatively short supply Johnston says there are also signs that the pipeline for deals is improving.

“I think you get to a point in any cycle where things have to happen, for example where a business owner is retiring. People who have parked plans now realise it is going to be a gradual recovery so by waiting a couple of years they are not going to significantly improve their position,” he notes.

Other expected growth sectors include technology, energy, renewables and healthcare, all segments which play to the strengths of Carson McDowell’s specialists in M&A, planning, procurement, regulatory, IT and intellectual property law.

And with many clients, such as Wrightbus and Chain Reaction Cycles, operating in export markets, the firm is also cultivating its links worldwide and increasing its capabilities to take on international work.

“In addition to developing new specialisms, it is also about building on the sectors where we are already strong and developing those further – you can’t stand still or you go backwards. We’ve looked at ourselves and realised we are very strong in a number of key sectors, so we need to make that clearer to people. For example, in the transport sector, we act for The Belfast Harbour Commissioners, Belfast International Airport, Translink and Wrightbus, and we need to make sure that the market is aware of that expertise and sector knowledge,” says Michael.

“What we want to do going forward is really emphasise our strengths, and our breadth of expertise that no other law firm in Northern Ireland can match, and use this to continue to grow the firm whilst continuing to work on the relationships we have with existing clients.”

He adds: “In this economic climate, the next few years aren’t going to be easy, there’s no point in pretending they are, but from an upside perspective it will continue to force us to focus on our clients, keeping them happy by matching our expertise with their particular needs. We are so fortunate to have great clients, brilliant lawyers and a plan for forging ahead. We have the fundamentals in place, we just need to keep making more internal changes to ensure our systems and processes are world class.

“In Northern Irish terms we see ourselves as remaining right up there, we’ve always been a leading firm and we are determined to keep that position whilst embracing change and fighting complacency.”

So despite an increasingly competitive marketplace, Carson McDowell looks set to remain a law firm to be reckoned with.

What his clients say

“Having worked with Michael on various types of transactions I have always found him to have a diligent and positive approach to any issue. His quiet, yet determined ‘can do’ attitude reflects the professional approach which pervades the whole Carson McDowell team.”
John Clarke, Farrans.

“I have always found Michael to be a highly competent commercial solicitor. He always applies a commercial approach to the law and quickly grasps a clear understanding of the needs of his client. All negotiations are conducted in a calm and reasonable manner backed up by irrefutable logic.”
Michael Moreland, Andrews Flour.

“I worked with Michael Johnston for a number of years on various aspects of our institution’s business. During that time I came to admire his professionalism and value his advice on a wide variety of legal issues. Not only is Michael very professional in his approach to legal matters, but his style and personality made him a great pleasure to work with.”
Public sector client.

By the time this article is published the MTV EMAs will be over and done with and, while you may not have been lucky enough to be there, it is unlikely you’ll have missed the publicity surrounding the event.

It was billed as an event which would showcase Belfast to more than more than 160 countries around the world via a triple-stage broadcast from the Odyssey Arena, City Hall and Ulster Hall, featuring the likes of Lady GaGa, Red Hot Chili Peppers, Coldplay and Snow Patrol.

As well as bringing some much needed glitz, glamour and rock’n'roll kudos to the city there is also a clear economic benefit to hosting an event on this scale.

The event will account for more than 8,000 hotel room nights at 40 hotels, who will provide accommodation for crew, artists and VIP guests – a much needed shot in the arm for the struggling sector.

Sixty trucks have descended on Belfast, bringing a lot of the technical equipment from the UK and Europe, but more than 90 local businesses have got work from the awards show, more local suppliers than have worked on any other EMA event.

As well as recruiting all of its show runners and backstage coordinators from Belfast the network is working with businesses ranging from internet and ISDN providers, photocopier hire companies, taxi and chauffeur businesses, production managers, event staff, security, catering, audio visual, venue branding, food concessions, furniture, riggers, restaurant and fencing companies.

Estimates suggest that the EMAs bring in around £10m for the host city, directly and indirectly, and there is a lot of competition to stage the annual showbiz bash.

The choice of Belfast can be seen as an encouraging sign for how far the local hotel and hospitality industry has come, as it had been overlooked on several previous occasions.

Richard Godfrey, Executive Producer of the MTV EMAs, told Ulster Business the music network had been talking to representatives in the city on and off for about 10 years.

“When the Odyssey first opened they made contact with us and at that point I came over to take a look at the city. The feeling then was that although the venue was great, the city wasn’t ready to host an event of this scale. We talked again in 2008 when the EMAs ended up in Liverpool. It was obvious what had changed but it wasn’t quite there yet,” he said.

“This time around, with the new hotels opening, all the investment you can see in Titanic Quarter and the real sense of optimism around the city, we were seduced, and here we are.”

MTV’s Godfrey said that after a successful test event with Mark Ronson as part of last year’s Belfast Music Week, his network was hugely impressed by the way the various Government bodies worked together to ensure they had everything they needed for the main event.

“I know things are very complicated politically in terms of getting things done. But having said that there was a can-do attitude from the Tourist Board and officials involved, everyone involved in the planning. There were a lot of people on the ground bending over backwards for us, who clearly were passionate about making it work. I have to say that is not always the case in host cities,” he said.

Belfast City Council and the Northern Ireland Tourist Board have between them contributed £870,000 to bring the EMAs to Belfast.

Kathryn Thomson, NITB Chief Operating Officer, is in no doubt that the investment was worth it.

“Events are powerful tools. They have the ability to give Northern Ireland a competitive edge, impact tourism performance and bring benefits to the economy. In particular, they can attract visitors at a time of the year when there is surplus capacity in the accommodation sector,” she explained.

“NITB’s own events fund supports major events that will attract a high-level of international visitors, gain international media coverage, and which are likely to provide a high return on investment.”

Thomson also notes that the show will be transmitted globally to an audience in excess of 532 million homes around the world via the MTV global TV network and that coverage of the event will be carried internationally across 500 satellite and terrestrial TV networks, a multitude of global radio stations and thousands of print media.

MTV is the world’s largest television network and the leading multimedia brand for youth. It reaches over 213 million households in Europe alone, through 28 different MTV channels and they receive eight million unique visitors each month to MTV Music websites.

Janice Gault, chief executive of the Northern Ireland Hotels Federation says the exposure and boost to Belfast’s image that could be gained, is perhaps just as important as the immediate commercial impact.

“With MTV it is an event of world standing, so you have the added bonus of getting seen on the world stage. That’s part of the normalisation process, where people see Belfast as a normal place to come, where events take place, and not some war-torn, tragic environment,” she said.

“Events do cost money to attract, they do cost money to stage, but if they are of international standing they are an investment and you hopefully get a legacy from them.”

Gault also believes that successfully hosting the event will help attract other bigger events to Belfast.

“We would be very keen to see events of an international standing on the calendar on a bi-monthly basis, with smaller events sitting underneath them,” she said.

“Probably MTV wanted somewhere that was a bit different, and Belfast has a young population with a big music scene. We are not a destination that appears on the news every day, but we’ve got venues that suit them, it’s relatively small, easy to get to and has good transport infrastructure. This is an easy city to stage events in because it is relatively small.”

A recent report from PwC said Belfast hotels can expect demand for accommodation to rise faster than in most European cities in 2012, but warned there would probably be little or no revenue growth due to falling public expenditure and competition for tourism spending.

In such an environment it is vital they use the MTV awards to kickstart business for the year ahead and to encourage the many visitors who travel here for the event and will be intrigued to see what Belfast is like, to come back.

MTV’s Godfrey notes that last year’s hosts Madrid used the event to create a different perception of the city. It had specific goals to portray itself as a modern, cool, weekend venue, and used the EMAs as part of a wider campaign designed to regain some ground against its hip neighbour Barcelona in the tourist stakes.

By shining the spotlight on Belfast it is to be hoped that the city will be increasingly viewed as a place the people want to come to, even when the stars are not in town!

FACT FILE

Local suppliers working on the MTV EMAs included: W5 (venue), Focus (audio visual), Tibus (ISDN and internet provider), Oltech (photocopier provider), KDM (furniture hire), Blacksheep (venue branding), TK Media (venue branding), Belfast Bus Company, Translink, Value Cabs, Fona Cabs, Mccombs, Crown Chauffeurs, Browns Coach Hire, Compass Coach Hire, Devines (transportation), Castle Catering, Production House Group (sound), Event Sec (security), Production House (sound), Terry Power (production manager) Paul Scott (Health & Safety and Event Management), Show Inc (fencing, event crew), Stage Crew UK, Lowes Refrigeration, CW Rigging, Total Event Rental (furniture rental), Balloo Hire, Smarts PR agency, Norspace (portacabins), Event Medic N.I (paramedics) and Astute (event staff).

“We don’t know what to do with people like you!”

That was a comment recently made to a colleague when signing up for Jobseekers Allowance (JSA) at their local Jobs and Benefits Office. The personal adviser wasn’t being unhelpful or disingenuous. They were simply highlighting yet another relatively unique feature of this recession – professional or high skilled unemployment.

“People like you” include engineers, lawyers, accountants and doctors. Over the last few years the professions have been one of the fastest growing occupations claiming JSA. In fact since spring 2008 benefit claimants among this group have increased almost fourfold in Northern Ireland to just over 2,100 people. If directors and managers along with associate professionals are included this figure rises to almost 6,300.

In relative terms the numbers are small (overall claimant count unemployment currently stands at 61,000) but the impact on these occupations are significant. Some of the most affected private sector professions include engineering, software (in spite of skill shortages in some areas), architecture, quantity surveying and law. Benefit claimants have increased 17 fold among architects, 13 fold among civil engineers and 10 fold among the legal profession.

Generally, the claimant count understates unemployment so its full extent among this group is to some degree unknown. For example, the numbers currently claiming JSA in Northern Ireland represent around 94 per cent of the overall estimated numbers unemployed here. Much of this difference can be attributed to eligibility issues in qualification for JSA, such as partner’s income. However, evidence would suggest that professionals are more likely to believe that they are not eligible for benefits particularly if they have received a redundancy package. This is despite the fact that “contributory” JSA is actually available to anyone who has worked in the last two years regardless of savings or any redundancy payment received. It is also a matter for debate as to whether, regardless of issues around eligibility, the professions are less likely to claim benefits because of the stigma attached to “signing on”.

However, the unemployment numbers paint only part of the picture.
Underemployment and self employment are also important issues here.

Underemployment involves people working in jobs where their skills are underutilised or where they are working fewer hours than they would like. It is very difficult to identify those individuals who are working in jobs where their skills are underutilised. This is to a large extent “invisible” although anecdotal evidence would suggest that this has become more prevalent among some professions. There is much more visibility however around those working fewer hours than they would wish. In this regard, professional occupations would appear to have been most affected. Since 2007 the proportion of those in professional occupations working part-time has doubled, up from 9 per cent to 18 per cent. Of course not all of this can be attributed to underemployment but it is likely to be a key contributory factor.

Necessity entrepreneurship is another tangible outcome of recession. People are effectively “pushed” into self employment because they have no other choice. There can be strong positives to this as it can provide the motivation to develop a latent business idea. Indeed many of today’s most successful businesses started out of necessity. And it can also be an important bridge between jobs. Evidence would suggest that many in this situation do end up back in employment when the economy picks up.

However, self employment can also be a form of hidden unemployment. It is an established fact that during recession self employed earnings are more likely to deteriorate compared to those in a job. It is also much more difficult for the self employed to qualify for unemployment related benefits because they pay Class 2 national insurance contributions.

The professions currently account for around 15 per cent of the self employed in Northern Ireland. Recent changes in occupational definitions mean that it is not possible to assess the overall scale of change in self employment since the recession took hold.

However, the Local Enterprise Agency network across Northern Ireland does have very direct experience of the background of individuals coming through their various start-up programmes. This includes the self employment option of Steps to Work, a government programme providing work-related options to help the unemployed/inactive back into employment. Kenny Rodgers of East Belfast Enterprise (EBE) has noted a relatively significant increase in the number of architects, surveyors, software professionals etc., setting up in business through these programmes. He estimates that the professions now account for around 20 per cent of EBE’s client base. Some of these individuals start their business in their related sector or occupation, but others have used their situation as an opportunity to develop a completely new business idea.

The changing composition of participants in the wider Steps to Work programme has also been noted. North City Training is responsible for Steps to Work in South and East Belfast. Liam McNeill, Director of North City Training, has also observed a change in the profile of individuals taking part in their programmes over the last couple of years. Again this has included solicitors, accountants and architects among others. He estimates that the numbers participating on their programmes from the professions increased by up to 10 per cent over the last couple of years.

There is an argument that professionals should not receive targeted Government support because they already have the skills, networks and in certain instances financial means to find their own way back into work. The counter argument to this is that they are just as likely to require support in job search techniques and also in identifying how they can transfer their skills into new occupations or sectors. The latter certainly seems the more accepted view from discussions undertaken in writing this article.

But it is difficult to avoid being generic when it comes to providing wide ranging support for the unemployed. Steps to Work does aim to offer personalised help and guidance with as much flexibility as possible. The problem is that the resources simply don’t exist to provide completely tailored support to individuals. It is not surprising therefore that one recent study concluded that support for unemployed professionals tended to be more fragmented and less rigorous than for other unemployed groups.

There have been attempts by government to directly target unemployed professionals. In 2008 Jobcentre Plus formalised their relationship with the private recruitment industry to help newly unemployed professionals back to work. In fact one of the Labour government’s objectives prior to leaving government was to actually increase the support to professionals from private recruitment agencies. There has also been a growing impetus around “self help” with the establishment of independent job clubs in England providing networking and support for professionals among others.

There are sectors in Northern Ireland which are expanding. Cathy McCorry, Managing Director of Grafton Employment Group, has noted recruitment activity increase in areas such as IT, pharmaceuticals and electronic engineering over recent months. However, there are actually skill shortages in these sectors. She comments that “those who have previously gained experience in the declining sectors will have to re-train for a different field of work to gain new employment in the emerging and growing sectors”. In her view this may mean starting all over again for some professions.

Without doubt young people, the unskilled and long-term unemployed have borne the brunt of this recession. Resources should of course be largely targeted towards these groups. But it may take only limited additional resources or even a reorganisation of existing resources to more effectively tailor support towards highly skilled individuals.

This will have obvious benefits to both the individual and the wider economy in terms of the application of their skills to new industries and opportunities. Perhaps this should be another agenda item for the policy debate around “rebuilding and rebalancing” the Northern Ireland economy!

John Turley, Associate Director at law firm Tughans outlines why it is so important that our budding elite sportspeople get legal advice early in the careers

The influx of money into professional sport in recent times has created a niche market for specialist professional advice, particularly in the legal and wealth management arenas.

It is becoming increasingly important that young sportspeople seek or are directed to the best professional guidance available as early in their earning lives as possible. This is especially true given their often short careers. While golfers may be in a position to compete well into their active lives it is not unusual for a footballer or rugby player to retire before 30. For example, in December 2009 West Ham and England striker Dean Ashton was forced into retirement at the age of 26.

Professional sport has come a long way since the 1970s when our very own George Best famously quipped “I spent 90% of my money on women and drink. The rest I just wasted.” Although widely accepted as being the most talented footballer and among the highest paid of a generation, his earnings of £150 a week are equivalent to around £60,000 a year today and pale by comparison to the earnings of other professional sportsmen and women of the modern era.

A recent study of football finance for the year 2009-2010 showed Chelsea to have the highest annual wage bill in the English Premier League, paying out £174m in salaries. It is not only in professional football where potential earnings can substantially exceed those in almost any other walk of life. Tennis’ Roger Federer’s annual earnings are quoted at $36m with a further $50m in total career prize money. Home grown Rory McIlroy’s annual income from endorsements alone was, according to CNBC in June 2011, in and around the $10m mark. In Formula 1, the 2009 world champion Jenson Button was reportedly worth £43m at the age of 29.

Natural enthusiasm and excitement can mean the full implications of a young sportsperson’s initial contract are not fully considered or appreciated from the beginning. The importance of ensuring that (1) the best commercial terms possible for the sportsperson are garnered from the contract negotiations, and (2) such commercial terms are then accurately reflected in such contract should not be underestimated.

The legal arena for sportspeople and their advisers has arguably never been more varied. While the initial contract remains of paramount importance, it is often only the introduction to the minefield of legal issues that can arise in a sportsperson’s commercial life. In addition to the more run-of-the-mill legal services, sportspeople can be expected to require advice in areas relating to their sponsorship arrangements and personal endorsements and also in relation to regulatory issues. A sportsperson’s personal endorsements usually require sponsorship agreements or licensing arrangements, and grounds on which issues and disputes can arise in this context range from breach of confidence or trademarks to copyright or patent disputes.

Complex legal arrangements are being implemented day and daily to create tax efficient structures for the housing of special image rights vehicles for sportspeople.
Furthermore, it is common nowadays to see sportspeople enter the world of media as television presenters either during or following their sporting careers (however good or bad for the viewing public that may be) and such relationships should be governed by a specific contract dealing with the issues these appearances can throw up.

In my own experience, lawyers’ relationships in a particular sporting field can also add significant value to the commercial terms of a sportsperson’s contract from the off. Add to that an ability to analyse and identify the prevalent issues legal issues described above, skills in negotiating the contractual terms and accuracy in drafting the terms agreed and you can see that the role and worth of an experienced lawyer in any sportsperson’s life can be significant. Sound legal advice can both protect an individual from exploitation and prevent costly litigation in the future by putting the right legal measures in place from day one.

It is crucial that a sportsperson’s different professional advisers work closely and transparently with each other so that the best interests of the sportsperson are protected and developed. This is particularly true from a wealth management perspective. Horror stories of players receiving disastrous advice are often exchanged over club dinners. Former Scotland and Blackburn Rovers footballer Colin Hendry was declared bankrupt in June 2010 and John Barnes, the former Liverpool and England footballer, was pronounced insolvent in 2009.

The failure of sportspeople in the investment field is often considered to be the result of high-risk and often obscure investments, recommended on the basis that this particular target market is looking for something ‘exciting’ to do with their wealth.
Indeed, in a story that appeared in the Daily Mail in February of this year, Manchester United footballers Wayne Rooney and Rio Ferdinand were reported as being among 25 sports stars embroiled in a legal battle involving property investments in London, Spain and the United States in which five and six figure loans were provided. The other sports people ranged from golfers to cricketers and swimmers. My contention would always be that were a lawyer to health-check investment proposals and arrangements of this nature, it adds a further layer of due process which could identify potential irregularities before it is too late.

The more savvy sportsperson should recognise the value of good professional advice. Former Liverpool and Manchester City footballer Robbie Fowler has amassed a growing estimated fortune of £30m through primarily buy-to-let properties. Dave Whelan, the current chairman of Wigan Athletic, founded JJB Sports (now DW Sports) in 1971 when his football career was cut short by injury and has since made more than £200m.

More recently, the sporting world in general has been awash with instances where the best interests of the adviser and the sportsperson are often conflicted. As in any relationship, trust plays a big part in any affiliation between a sportsperson, be they young or old, and their lawyer. There is an argument that a lawyer is better placed than people in certain other advisory fields given the regulatory compliance and professional standard expected from them and recent trends have shown an increase in the activity of lawyers in the sporting arena. It should also stand to reason that when a sportsperson is comfortable that their affairs are in a safe pair of hands, they can concentrate their efforts on their chosen sport and performance should improve.

And improved performance for all concerned can only be in everyone’s best interest.

CAPTION: Tennis player Roger Federer, who is sponsored by Nike, has estimated annual earnings of $36m

With uncertainty in the air again Northern Bank’s Managing Director for Business & Corporate banking Kevin Kingston tells Ulster Business the bank is ready to play its part in economic recovery by backing those local businesses prepared to hold their nerve and invest for the future

At a time when Eurozone finance ministers and the US government are trying desperately to hold the global economy together and financial markets are jittery, it is perhaps no surprise to learn that many businesses are again taking stock.

Northern Bank’s Kevin Kingston has a very real sense that firms who were beginning to look at investments and acquisitions at the start of this year are now not so sure of themselves.

But the bank’s Managing Director of Business & Corporate Banking believes it is essential that businesses have the courage to keep making decisions for growth, rather than putting them off until such time as the economy has clearly recovered.

“Companies are definitely more cautious than they were even a year ago,” he told Ulster Business. “There was improving optimism in the first few months of this year, particularly among those businesses trading internationally. The global exporters were really doing quite well and we were starting to see requests coming through for increased working capital lines, which was something we hadn’t seen for a couple of years.

“But over the summer the mood has, not surprisingly, become more subdued, with the impact of both the situation in the US, and the Euro crisis taking their toll on business confidence. I would be concerned that people are again starting to think about putting investment decisions on hold until they see what way the economy pans out,” he adds. “Naturally we wouldn’t suggest that businesses should be taking reckless risks, but there is an element of our destiny being in our own hands here. Simply waiting for things to recover isn’t the way to get our economy moving again.”

Kingston believes the economy should expect “a long slow climb out of recession back to growth” with the bank forecasting only 1% growth this year. But he emphasises it is those businesses that are proactive and who adapt to this new economic environment – the new “normal” – that will prosper.

“We need to keep moving forward as an economy. If we focus simply on the downsides and on waiting for growth to return, businesses could very well miss out on opportunities,” said Kingston.

STRONG FUNDAMENTALS

Like most of the world’s financial institutions, Northern Bank itself has had to adjust its business model to the new economic environment.

But, explains Kingston, the bank remains in good health with a strong balance sheet position.

“Our customers have not been immune to the challenges of the downturn and it is inevitable that we had to make prudent provisions. Given the ongoing deterioration in the ability of some customers to repay borrowing, those will probably continue for a while to come,” he said.

“However this doesn’t threaten the viability of our balance sheet. We’re in the fortunate position that we have the funding and liquidity to comfortably absorb these provisions. We need to support customers and we have the appetite to do that. The fundamentals are still strong.”

Northern has been perhaps the most vocal of the so-called “big four” in Northern Ireland when it comes to drawing a line between itself and its competitors. Kingston believes misunderstandings arise when the business community and politicians at Stormont look at the banks as a collective, rather than with a full understanding of the individual organisations, with their own challenges and opportunities.

Contrary to some claims targeted at the wider banking industry, Kingston says Northern Bank is lending money, but he stresses there are factors at play that mean comparisons with prior years don’t tell the whole story.

“Our customers are very conservative, they are paying down debt, and they are paying down debt faster than we are lending money at the moment. In our half year results our deposits were up 5% and our balance sheet lending was down about 6%. But yet we’re still approving about a billion pounds on a 12 monthly cycle,” he explains.

“My team is working very hard to find customers to do business with. Are we lending to every proposition that comes through the door? No we are not, and I think people would understand that. We are in a strong position and both for our customers and our shareholders we have to stay that way. But at the same time the appetite to lend is absolutely there and that appetite is clearly demonstrated by the number of businesses taking the decision to move their banking to us.”

The bank has continued to invest in its business banking and corporate team and will make further appointments over the course of the next year to ensure it has the right blend of traditional banking skills and financial engineering capabilities to continue to distinguish it from the competition and help it win new business customers.

Some of those supporting Kingston in an experienced team at present are Head of Acquisition Ivan McMinn, Business Acquisition Manager Oonagh Murtagh, and Senior Cash Management Specialist Karen Kennedy. The expanding business and corporate team will play a vital part in the bank’s plans for ambitious growth, even in a slow paced recovery, he says.

RELATIONSHIPS

Despite its strength, the bank has, like so many of its business customers, had to adapt what it offers – moving from the traditional focus on lending to one that focuses on the entire package and all of the ways in which a banking team can add value to the business customer. That package includes products needed by ambitious trading businesses, such as cash management and trade finance, which have helped the bank build loyalty by saving customers money.

Loyalty is of course something that customers want to work both ways and Kingston says his bank is genuinely prepared to work with existing business clients who find themselves in difficult circumstances.

He adds that there are numerous examples where the bank has helped firms that have perhaps been purely focused on the Northern Ireland market to realise the need to re-engineer their business model and refocus externally – Smiley Monroe is a case in point.

“We would always aim to support those companies with the ambition to change and adapt. It is those companies that will make it over the longer term, the ones that can assess their environment, adapt their business model and continue to move forward,” says Kingston.

“It is by having the right relationships with customers who are investing, growing and trading internationally, that we as a bank can expand our own business. It is in our interests to have those customers with Northern and to support them, because we thrive on the back of their ambition.”

Reinforcing its support for outward looking businesses, the bank has become a major partner in the Northern Ireland Chamber of Commerce’s Export First initiative, alongside law firm A&L Goodbody and accountants ASM. Kingston says the bank got involved because the programme is about more than just telling firms to get out there and export, instead offering practical advice to help businesses understand the opportunities and challenges that exist globally.

“It is often the practical considerations that can be intimidating, but which are manageable once you’ve got someone to help you work your way through the process. We believe exporters are a huge part of the future of the local economy,” he adds.

TYPES OF FINANCE

With a greater awareness of the dangers of high levels of leverage, Kingston believes there is a bigger role for the bank in terms of financial engineering. Structuring debt, making the most of a company’s balance sheet and thinking about the right product for the specific needs of the customer have never been more important.

Added to that he thinks there is a need for businesses to consider other types of finance alongside debt, such as private equity and venture capital – both of which have seen relatively modest uptake in Northern Ireland.

“I think we are moving to a world where, in order to get transactions done, particularly acquisition/equity related transactions, we are going to have to move from a position where historically it was a bi-partite arrangement between a bank and a customer, to a tri-partite arrangement where an equity provider will sit alongside a bank and the customer,” said Kingston.

“We’ve seen the importance over the past few years of building financial structures that are capable of surviving the downswings as well as the upswings. That’s where equity can have a real role to play. It is a different mindset for the typical Northern Ireland family company. But for a business that is ambitious, putting in place the right equity platform is one way to ensure they are best placed to seize the opportunities that are in front of them.”

Case Study: Smiley Monroe

Smiley Monroe is Europe’s largest producer of endless conveyor belts for the mobile crushing, screening and recycling sectors. Managing director Vaughan Monroe recounts the challenges his business faced in the downturn, his relationship with Northern Bank throughout that time, and how with the support of the Bank, the business has emerged with confidence into new markets.

The first glimpse of the challenges that we were to face began to emerge in the autumn of 2008. After six years of sustained growth, we faced the stark reality of order cancellations and uncertainty. Our clients typically amassed stock. Before the year was out some of those “what if….” possibilities had come to fruition.

The downturn may be characterised by the tough decisions that many businesses have had to take and we were no exception. We took an uncompromising position on cost reductions, which was not without its inevitable impact on our staff.

We brought the Northern Bank team up to speed with our challenges and the actions we were taking at the earliest opportunity. The bank was entirely supportive as we renegotiated contracts with suppliers and we stayed close to the team throughout this process, with a shared priority to stop what might have become irrecoverable haemorrhaging of cash from the business.

We had moved swiftly to stem the flow, and the Bank put its weight behind our efforts. We established conservative and realistic targets. Three main imperatives would steer our way to recovery though an agreed new business model: achievable financials, stricter control of credit and costs, and the potential revenue from export.

We had been exporting since the 1990s but the challenges presented by the downturn were to give our export focus new momentum by 2009. Northern Bank had always been encouraging of our overseas expansion and we kept the team regularly appraised of our plans, forecasts and successes. Despite our vulnerability at a time of crisis for the business, Northern Bank’s genuine interest in our export potential enabled them to stand firmly beside us. That relationship and investment from the Bank enabled us to continue with the modernisation of our factory – work which was underway but far short of completion when our problems began and which was to be crucial in our recovery.

That support enabled our ambitions to be realised and gave us a substantial competitive edge, allowing us to aim not just for survival and recovery but also for diversification, growth and a new and sustainable way of operating. We have since diversified into new sectors that have weathered the storm better than others (including fisheries, food, pharmaceutical and packaging). We are also introducing lighter duty conveyor belts and gaskets to traditional and new customers, particularly in the growing recycling sector.

Despite the challenges we faced, we maintained a steady presence and profile in both existing and potential new markets. The combination of the right financial controls and sustained marketing ensured that we had the ability to react quickly when business opportunities arose.

The challenges and opportunities of the past four years have been characterised by the support of two teams. Our own staff team at Smiley Monroe showed unparalleled commitment and remain central to the ongoing success of the company, whilst maintaining our involvement in the local community in which we operate. The Northern Bank team stood by our plans and the creation of a new company model with a flexibility and interest that has been vital to the confidence that was so important in turning around our business.

With those teams behind us, Smiley Monroe has been able to stay the course, fulfil its ambitions, and expand further its world-wide reputation for service and solutions.