Posted on Wednesday 7 November 2018 by Ulster Business
With exports and international business worth around £24bn a year, fuelled by a growing manufacturing sector, John Mulgrew looks at those making it work abroad and the Northern Ireland’s businesses which rely on selling outside these shores as their bread and butter
When you’re on your way out the door of the world’s largest trading bloc, it’s perhaps time to take a look at the significance and success of Northern Ireland’s exports.
For some, it’s an emerging market which makes up just a small proportion of overall sales – to others, it’s their bread and butter.
“Exports and external sales are an important source of income for a small open economy like ours,” Stephen Kelly, chief executive of Manufacturing NI says.
“Bringing more money in from external markets puts more money into the economy whereas other parts of business consume the cash already in circulation so the economy grows rather than incrementally decline.”
Manufactured goods account for almost 82% of Northern Ireland’s overall export sales, and 78% of external sales of goods. Total exports in 2016 were worth around £22bn to the economy.
And as this is being written, Northern Ireland and the UK as a whole stands on a precipice of whether or not a back-stop arrangement, deal, or ‘softer’ Brexit will be negotiated.
The key strand of this, is allowing trade with the Republic of Ireland to continue uninterrupted – or as undisturbed as possible given the ramifications of the largest constitutional upheaval to take place in a generation.
The latest estimates from NISRA and the Department for the Economy indicate Northern Ireland registered companies made cross-border export deliveries to the Republic in 2016. That’s estimated to be worth some £3.4bn to the Northern Ireland economy.
Of course, some of Northern Ireland’s biggest employers and leading companies rely almost entirely on exporting their goods and services.
Bombardier, which is now in a tie-up with French firm Airbus on its C Series passenger planes and wing production, sells most of its products outside Northern Ireland and the rest of the UK and Ireland.
There are also home-grown Northern Ireland businesses, for which their base here is about putting back into the economy – through taxes and creating employment – but their market is almost in its entirety, outside the island.
Craigavon-based AJ Power produces generators, and counts Europe – and in particular Scandinavia – as its main customer base.
Some of the other large-scale manufacturing exporters include heavy equipment company Terex, which employs 1,000 people in Tyrone.
For Northern Ireland, the Republic remains the largest market outside of the rest of the UK, with many companies – especially those across processing and agri-food – operating their businesses on an all-island model.
That’s one of the primary concerns of the largest firms here, without a clear post-Brexit agreement in place, to ensure the flow of goods and services. As it stands, any ‘no deal’ scenario could mean everything from stopping the sale of dairy and meat, outside Northern Ireland and the EU, to impacting on the key free-flow of migrant workers – something many large employers here rely on.
Speaking to business boosting organisations, groups and councils, the message among the small and medium-sized companies that they represent – is that they wish to export, and export more. >
Of course, it’s not just our manufacturing and engineering sectors which are thriving outside of these shores.
FinTrU – one of the fastest-growing firms here in the last few years – relies entirely on exporting its services.
The financing outsourcing business – which this summer announced the creation of 600 new jobs and a second city hub, this time in Derry – works with global tier one investment banks.
It’s a company which has grown into a multi-million pound service business in the space of four years – reliant entirely on exporting.
“We’re getting better at exporting. While the number of firms exporting has declined, the value of our exports continues to significantly grow. In 2016, exports of goods totalled £8.3bn, up almost 5%,” according to Stephen Kelly.
He says that’s been driven by almost “exclusively export focused firms in engineering, aerospace and pharma”.
“Firms like CDE Global, Thompson Aero Seating, Edge Innovate, Almac, Norbrook and many others focus on markets overseas because that’s where their customers are.
They are proven to be competitive, but more importantly innovative beating competition from larger firms, closer to the market.”
And it’s also the same for the foreign direct investors Northern Ireland has here – many of which have been assisted by Invest NI.
Some of those include technology and cyber-security firms, such as a Black Duck and WhiteHat Security.
And while Northern Ireland also has a thriving indigenous legal sector, several large-scale law firms have set up major operations here, but their work remains outside of our shores.
That includes Allen & Overy, Axiom and BakerMcKenzie. The latter, which originally planned to have 250 staff in the city, has announced it will lease out extra space in City Quays 2 close to its existing offices to cope with the increase in staff.
It provides 30 legal and business services from the Belfast office, including finance, corporate support, marketing and IT.
Of course, while many still thrive, some of the large-scale stalwarts of Northern Ireland’s manufacturing sector have been hit with huge job cuts, or, pulled the plug on operations in the last few years.
Michelin’s announcement in 2015 that it was to close its plant was the second setback for the town’s economy after plans to close the JTI Gallaher cigarette factory, where 800 people were employed, were revealed the previous year.
And while Bombardier appears to be in a more buoyant position now, following its successful win over Boeing in the US following the rival’s complaint the Canadian-owned company was ‘dumping’ aircraft – selling below cost – and receiving unfair subsidies, the company has seen job cuts in the four figures.
That started with more than 1,000 roles being slashed in 2016, and with smaller job cuts announced in the two years since.
And there’s a reliance on the those big manufacturers, in helping to also drive the economy here. Around 1% of our manufacturers employ almost half of all those who work in manufacturing, and 49% of turnover.
Food makes up another chunk of Northern Ireland’s exports. That’s everything from leading brands such as Bushmills whiskey, to our high-end meat – such as Peter Hannan’s salt-aged beef, which goes as far afield as top-end restaurants in Hong Kong.
“As we Brexit, the challenge is how we ensure these firms can remain competitive,” Stephen says.
“How can we avoid lumbering them with cost and complexity in their supply chain and in servicing their markets. Attracting and developing the best talent and ensuring they have market access when the UK leaves without (at least in the short term) no international trade agreements.”