Law Society president Brian Speers believes that the expertise that exists in the local legal market coupled with Northern Ireland as a region successfully emerging from a conflicted society could make it an ideal destination for solving international corporate disputes.

Mediation is the process by which a neutral person chairs talks aimed at helping two opposing parties to reach an agreement they can both live with. Speers highlights Senator George Mitchell’s role in Northern Ireland’s peace talks as the perfect example of a mediator.

“Northern Ireland has emerged from a conflicted society. It has reached the point it has reached as a consequence of a meditative resolution,” he told Ulster Business. “Dispute resolution crosses borders, it is an international scene, and I think we can absolutely compete in this arena to bring commercial resolutions to cases.”

Having conducted over 50 commercial mediations, Speers is one of the most experienced mediators here, and is a visiting professor for dispute resolution at the University of Ulster’s School of Law.

He notes that, having spoken at international conferences about the possibilities of commercial mediation in Northern Ireland, it is clear that many other countries are trying to establish themselves as hubs for dispute resolution. However, he believes the province has a strong proposition and expertise comparable to anything on the international scene.

“Why is it that disputes are settled in Hong Kong or Singapore or London or Paris. Why are countries vying with one another to become centres for disputes? Because there is professional-led business to be done,” he explains.

“I think we need to get on our bikes and put on our mediation hi vis jackets and we need to be out there saying this is a great place to do business and also a great place to resolve disputes in business,” he adds.

“We have the hook of troubled society, the leadership and the mediation experience. We have a story to tell about how attitudes can be transformed, and we have the emergence of the legal sector in our economy. Legal firms are big employers, big consumers of services, big spenders of money in the local community. They can attract inward investment and export their services.”

Invest NI has an interest in this element of legal services and is understood to be in negotiations with an international dispute resolution organisation about establishing a base here in the new year.

But with the difficult economic environment leading to more disputes among local companies, Speers believes it is also something more local businesses should also consider.

More than 9 out of 10 disputes are settled before getting to trial, but this is mostly done through negotiations between solicitors. The Law Society president believes entering the mediation process would allow people to emerge feeling like they had had their day in court and been able to air their grievances and reach a commercial agreement that doesn’t feel like a hollow victory.

In some countries – including Australia and some US states – it is mandatory to ‘mediate before you litigate’. An EU mediation directive came into force in April for cross border disputes, which although stopping short of mandating it, does encourage mediation and could be very relevant here given the land border with the Republic of Ireland.

While Speers does not think we are quite ready for mandatory mediation in this part of the world, he senses there is a sea change in attitudes taking place.

“We now have a much better informed legal profession and there are now many solicitors and barristers with better knowledge about mediation and therefore better able to guide their clients towards it,” he said.

And for solicitors it is also another potential revenue stream at a time when many are struggling.

“I see this as being a response to the recession, particularly for solicitors who very traditionally saw their role as serving the local community with property and inheritances and divorces. When you think about it a lot of our indigenous businesses are family owned companies and a lot of those companies will have disputes arising between different generations, succession issues and those are very amenable to resolutions processes. Often people are just looking to ensure their legacy can continue,” he said.

“It is all about people and what you are seeking to do in a mediation process is to manage expectations and meeting their interests.”

Until the recent golfing successes of Padraig Harrington and Darren Clarke, the only Irishman to have won the Open was Fred Daly in 1947. His name lives on amongst Northern Ireland’s golfers – but did you know that he didn’t just play the game, he was heavily involved in the design and development of the clubs he used – and which carried his name?

Now his son Robin, a former golf professional himself, is carrying on this tradition. Robin founded Daly Golf and designed a unique new putter which is already causing ripples across the golfing world. Indeed the distinctive design has seen the product become known in golfing circles as the ‘peanut putter’.

Drawing on his and his father’s experience as a golfer has allowed Robin to develop this new putter. The beginning of Robin’s own career in club design was sketching club ideas down on paper having listened throughout his childhood to his father coming in off the course. All golfers at all levels do this, recounting stories of the dropped shots that could have turned the 72 into a 68 or 68 into a 66!

New golf technologies are closely regulated, but Daly have been accredited as a manufacturer on the European Tour since 2009 and have built customised putters for over 40 tour players including Vijay Singh, Darren Clarke and Simon Dyson. Tour players using Daly putters have achieved a top ten finish already and the first tour win can’t be too far away.

The magic sauce is two unique technologies which improve your setup, weight distribution and feel. These are the unique Bi-Concave™ Profile and Repeatable Anchor System™ which ultimately help with a smooth and steady putting stroke and generate more confidence on the green. After that, it’s all up to you.

Robin’s magic has been translated to reality by experienced designer Alan Boyd who is now the R&D Director. But early successes with well known golfers like Vijay Singh and celebrity customers including Ruud Gullit and Len Goodman did not lead immediately to increased sales.

The chosen market route via retail outlets proved difficult and a new approach was needed. Fortunately Daly Golf pitched (literally) at the Halo business angel network and as a result gained both investment and input from Michael O’Neill and Gary McCausland. Michael and Gary’s marketing experience has resulted in a new strategy through a direct online platform coupled with a policy of grass roots support. Each retailer has the opportunity of stocking three putters and aggregating sales through the Daly website directly to customers. This means that retailers do not need to hold stock and yet the company collects immediate payment on sales.

In addition, the company directly supports the golf market – both by Sponsoring Pitch and Putt internationally and the PGA Ulster Grand Prix. They also make extensive use of social media and are the first golf OEM to introduce a Facebook store on their Facebook page where customers can buy directly.

Initially Michael was attracted by how well the Daly Putter actually worked. Interested enough to actually buy one on the night at Halo, he found that it really made a big difference to his putting. This of course inspired him to get involved with the company as belief in the product is a great starting point.

Gary, who is well known for his TV work, is another keen golfer who brings a wealth of media contacts and experience to the company. He and Michael are a good example of the truism that angels bring a lot more than ‘just money’ to a new company.

Daly Golf is now growing and well positioned to sell internationally especially via www.dalygolf.com although they have retained their coaching and custom fitting centre at Ballygowan. So if you’re interested in having a little of the Daly magic rub off on your game, you know where to go.

As Robin says: “We can’t sell you a better score, but we can and do produce the equipment that allows you to find it yourself!”

Belfast web hosting company are on an upwards Spiral

One of Northern Ireland’s biggest web hosting providers has moved to new offices in preparation for enhancing its workforce and growing its business.

Signalling that the company is defying the difficult economic circumstances out there at present Spiral Hosting officially opened its new office on Belfast’s Lisburn Road last month.

Managing Director Peter Armstrong says the company has big plans for the future.

“Over the past few years we’ve made several acquisitions and at the moment things are moving quite fast and we’re looking to expand a lot over the next year, both through organic growth and further acquisition,” he said.

“We have new offices on the Lisburn Road and that is so we can employ more people, particularly marketing people to help with the marketing side of the business and PR campaigns which we’re planning to run, as well as on the technical side. At the moment we are just a small team but we’re hoping to get a good office going here.”

Armstrong has been working in the web hosting industry for eight years. He bought the client base of a former employer in Dublin and re-launched it as Spiral Hosting in Northern Ireland in March 2007.

The company is already very much an international business, with Armstrong estimating that only about 5% of its customers are in Northern Ireland.

“We have a lot of customers in GB and the Republic and about 25% of our customer base is in the US. While we have opened a new office and are trying to concentrate on expanding in Northern Ireland, at the same time we are marketing internationally,” he explains.

“At the moment we sell in euros, dollars and pounds, but we’re getting ready to launch a new website that will support a lot more currencies. There are so many different markets we can get business from it would be silly not to try to do that.”

In terms of the business it is targeting the company hopes to attract anything from SMEs to entrepreneurial students with start-up businesses, and is appealing to that younger demographic using social media.

Its acquisition of rival web hosting company Aventure Host earlier this year has also given Spiral an avenue into the Cloud market. Aventure were the first cloud web hosting provider in Ireland.

“Cloud is still a developing market that is constantly changing but it is certainly a big selling point for us that we are able to offer cloud hosting,” says Armstrong, noting that a lot of clients still want normal web hosting on dedicated servicers and virtual servers.

Spiral Hosting knows it is operating in a very competitive marketplace, but their MD is confident that by providing a good service they will be able to prosper. He is hoping to attract good quality staff, both graduates and experienced people, to help grow the business.

“It is competitive. In Northern Ireland we would be the largest hosting company as far as I’m aware, but there are a lot in the Republic and GB, which is why we concentrate on offering a personal service with a dedicated account manager who would keep in regular contact with customers,” he said.

“We try to go the extra mile for businesses and because we are a local Belfast-based company they can call us 24/7. We do have a lot of customers coming over from other companies who wouldn’t offer the same level of support and assistance when they need it, meaning ultimately the companies themselves have to hire technicians to fix problems that are generally quite simple.”

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.”

Hugh Morgan spent the best part of 10 months on the road last year.

The founder and Managing Director of the Killean-based Morgan Fuel Group racked up the miles as part of a push to expand the network of filling stations across Europe which house terminals that accept his company’s fuel card. During that 10-month spell he estimates he was taking up to six flights a week to meet with potential clients.

“I would sometimes be getting up at a hotel in the morning and not knowing what country or city I was in. It was hard graft but if it has to be done I’ll do it,” he told Ulster Business.

Clearly the hard work has paid off. The Morgan Fuel Card is now accepted in 4000 filling stations across 14 European countries. The latest addition to the network is a chain of filling stations in Sweden and the business hopes to soon announce its first stations in the Czech Republic, Slovakia and Hungary.

The card offers hauliers and commercial fleet operators fuel purchasing and on-line fuel management services across Ireland, the UK and Europe and is currently used to purchase fuel by over 20,000 commercial drivers. The business now employs more than 80 people on the island of Ireland, France and Hungary and has turnover of around £150m.

It is a far cry from where Morgan started out. After leaving school at 16 he worked as a truck driver and then in 1981 bought a petrol station on the border. From there he began to develop the idea of a network of 24 hour, unmanned, multi-lingual fuel terminals. Today, Morgan Fuels is the only independent fuel card provider with no tie in to the major oil companies.

“It is a concept that works everywhere. The network can keep growing, we can keep adding additional sites, and we have the ability to partner with anyone in the fuel industry,” explains Hugh.

There are however, no rigid expansion plans regarding where will be next, because opportunities often come up where least expected, he says.

“As we develop the business we will be looking for opportunities and if it’s the right one we will take it. We’re not afraid to take big decisions. We can make them there and then – there are no shareholders to consult as there are in the big firms. That makes us pretty nimble,” he adds.

“The same goes for challenges. Nobody knows what they will be and you have to face different challenges in a different way. In all my years in business I have learned that every challenge is different.”

When he talks about challenges it is impossible not to ask about the recent publicity Morgan received during the Irish Presidential elections.

It emerged that he was the businessman who in 2008 gave presidential hopeful Sean Gallagher a €5,000 donation for Fianna Fail, a political party Gallagher was strenuously playing down his links to. Gallagher’s handing of questions about his history with Fianna Fail was seen as decisive to the race and the presidency eventually going to Michael D. Higgins.

The intense press interest in the story catapulted Morgan on to the front pages, and in the process resulted in his own past being dragged into the public spotlight. As part of this he confirmed he had been convicted of tax evasion in the mid 1990s in relation to fuel smuggling, but also that he had repaid the Exchequer and paid a substantial fine.

Despite the furore the Newry-based entrepreneur refuses to be downbeat about the experience.

“You have to look forward, why look back,” he shrugs. “I made my mistake in 1994 and I have paid dearly for it. But when your name’s already out there you might as well engage with the publicity and use it.”

Morgan’s view is that whatever the economic situation, his customers need fuel to keep their businesses running and so long as the firm provides a good service, the future is bright.

“We don’t worry about anybody,” says Hugh. “I take the view that everybody else should worry about us! We give a good service and we look after our customers and employees. That’s it. What anyone else thinks doesn’t bother us.”

Morgan is of course well known in the border region for his long-standing support of GAA and it is when the conversation turns to his beloved Armagh that he is most enthusiastic.

The businessman has for many years been the principal sponsor of the Armagh GAA and recently secured the naming rights to the Armagh Stadium – now known as the Morgan Athletic Grounds.

But while the Armagh colours coincidentally match the Morgan Fuels logo and he admits that being one of the largest sponsors in GAA has “opened doors all across Ireland” he insists the arrangement has nothing to do with commercial gain.

“It was never about an advertising campaign, it was always about pure passion,” he says. “This is the sport I have followed all my life and I enjoy every minute of it. It’s just my passion, my club and my county.”

The all-Ireland operation of BT is becoming something of a training ground for the company’s top talent.

Chris Clark, who served as CEO until a couple of years ago left to take up a role as head of BT Enterprises and his successor Graham Sutherland also recently moved to London after just over a year at the helm of BT Ireland for a job as managing director of BT Business GB.

Sutherland’s successor, Colm O’Neill, joined BT in 2009 as managing director of business in Ireland, prior to which he worked for nine years at EMC, latterly as its country manager for Ireland.

I talked to him a few days after BT released third quarter results showing a 3% rise in underlying earnings to £1.5bn and a slower than forecast 2% drop in revenue to £4.9bn.

The statement had only a paragraph on the local operation, which mentioned the progress of the company’s fibre broadband roll-out in Northern Ireland and noted that “BT Ireland revenue, excluding foreign exchange movements, was broadly flat despite the challenging economic environment”.

“I think when you look at the kind of results our competitors are posting that’s a solid performance. Revenues are in and around flat, the profitability continues to grow,” O’Neill told Ulster Business.

“I think we’re executing well on a plan and we have a diverse business, which is helping us. People continue to consider us purely a telecoms company but when you see how the telecoms sector is struggling and we are substantially outperforming at a top and bottom line level, you start to see value in the diversity. A substantial part of our business is now technology services and that has gone really well in the past few years.”

The BT CEO further comments that to deliver a similar performance to GB in a more challenging context is a good outcome. The Republic of Ireland market is generally tough and BT has found that small businesses in Northern Ireland are being slow to invest until they are more confident of the future, he said. The best performing area of the business has been in the large corporate segment.

“We are finding that the larger corporates – whether people investing here or larger indigenous organisations – are investing in technology and we’re also finding that larger players are moving more to one supplier, aggregating things they would have bought from multiple companies and asking us to do it end to end. Our diversity means we can add value for customers,” said O’Neill.

“We’re rarely going to be the cheapest. Price isn’t our value proposition, our proposition is a good service, reliably delivered, and that segment of the marketplace is really focusing on value.”

He also believes that the Republic of Ireland – where BT is a challenger rather than the incumbent telecoms supplier – represents a substantial opportunity for the company.

BT currently has a sizable businesses across the border which has been growing for more than 12 months, but still has relatively low market share, perhaps because it is again focusing mainly on the mid to large size corporate sector.

Assisting with this is the fact that BT’s fibre-based transmission network in the Republic of Ireland is now operational with its first corporate customer on board.

FIBRE

In Northern Ireland, BT’s rollout of superfast fibre broadband has now reached around three-quarters coverage, with almost 600,000 premises passed and Derry-Londonderry becoming the first city in the UK to have all cabinets upgraded to fibre as part of BT’s support for the City of Culture campaign.

O’Neill notes that it has achieved more connections than originally budgeted for this year, with the target of connecting 40,000 homes by the end of December now raised to more than 50,000 due to greater than expected uptake.

“Fibre has been a big success story for us, and for our customers as well. It is a product they like and get value from. The raw speed piece isn’t a big issue, we’re finding the advantage is in a family home where multiple people can be online at the same time,” he said.

It has been pointed out a lot over the past year that the £48m project – into which BT contributed £30m and Government departments £18m – will give Northern Ireland a significant advantage and O’Neill agrees it is a massive selling point for the province, particularly where FDI is concerned.

“For us it has been a successful investment. We’ve put Northern Ireland ahead of the rest of the UK and we would argue we’ve put it ahead of the rest of the world by making this part of the world more connected than many of the major cities around the world,” he said.

“We’ve also managed to position ourselves as a vanguard for innovation in the overall BT group. We’re going to be at 90% fibre coverage by the end of this financial year. The prediction is that it will be 2017 before BT Group is at a similar point so we’re way ahead of GB.”

As he seeks to make the most of that advantage O’Neill says his goals in the top job at BT Ireland are fairly simple – to listen to customers to ensure they are getting good service and to keep costs under control.

“In the current market you can’t get out of position on your costs because your customers will find out straight away and punish you for it. So I want to make sure there is a laser focus on cost. It is probably a little boring for a new CEO but we have a good solid plan here that has been formulated under Chris (Clark) and it is something we as a leadership team have been continuing to drive through,” he explains.

“We’re very confident in what will drive our growth. That is fibre in Northern Ireland; we’re confident in our ability to drive ICT and telecoms aggregated services; and we’re confident the ROI marketplace represents a strong growth opportunity.”