Irish manufacturers have been warned to make preparations for a ‘Hard Brexit’ at the National Manufacturing and Supply Chain Conference held last week at the Citywest Convention Centre, Dublin.
Brexit negotiations have moved onto the second stage between the EU and UK following a commitment in December to maintain the free-flowing Border between Ireland and the UK. However, delegates at the National Manufacturing & Supply Chain Conference expressed concern over the practicalities of the arrangement and how the promise of a free flowing Border will be achieved.
“There will either be no Brexit and the decision will be completely reversed or there will be some form of declaration required between the two islands. Some things will change in your supply chain. They may be soft changes or they may be very extreme changes,” Brian Murphy, Head of Trade Services, Irish Exporters Association told delegates.
Over 80% of goods that leave Ireland for continental Europe travel through the UK, meaning the potential disruption for Irish businesses could be enormous. In 2016 over 1.3 million Customs declarations were handled by Irish Customs Authorities. Should Brexit happen, the UK would become a ‘third country’. A country outside of the EU for which goods must pass to reach their destined EU Member State. In a ‘third country’ scenario customs declarations handled by Irish customs authorities are expected to increase to 20 million post Brexit according to the Irish Exporters Association.
“Over 25 years in the single market has made us very complacent in respect to international shipping. The best we can expect is a Swiss/Norwegian model post Brexit but at the very least there will be transit declarations so we advise shippers to get used to how it works.”
The manufacturing sector accounts for 25% of Ireland’s GDP and employs over 440,000 people. The sector has seen steady job growth over the past five years but already Brexit is beginning to have a negative effect on certain export sectors with the agri-food sector being adversely impacted, seeing a drop of 6% in exports to the UK over the past two years.
Former European Affairs Minister & CEO of Vulcan Consulting, Lucinda Creighton addressed delegates on the impact of Brexit and highlighted risks to Irish businesses potentially exposed by the lack of clarity on customs arrangements.
“What is certain is that Border issues will raise their heads again if the UK leaves the Customs Union,” she advised. “Now is the time to measure the level of exposure you have to prepare for the worst case scenario. There will be some sort of transition period. We don’t know exactly how that is going to work but we have to operate on the basis that once it is over that our business and exporters will be exposed.”
“In terms of Customs checks and delays in ports, Irish ports don’t have huge capacity issues but UK ports do and we don’t know what system will be put in place yet. So, while we can liaise with authorities here at home, we have no idea as to what to expect from UK authorities on procedures.”
A recent Behaviour and Attitudes survey conducted for the Department of Business, Enterprise & Innovation found that 75% of SMEs expect to be impacted by Brexit over the next 18 months while less than one-fifth of those SMEs had a formal Brexit contingency plan. The survey also revealed that Brexit is discouraging SMEs from investing in their businesses according to Minister Pat Breen, who addressed delegates on Main Stage at the conference.
“Regardless of whether Brexit represents a challenge or an opportunity for your company, as a first step, I strongly encourage you, at company level, to ensure you have prepared and planned for Brexit. While the Government is leaving no stone unturned in its efforts to respond to Brexit, it is critical also for companies themselves to consider their business operations,” Minister Breen said.
The annual National Manufacturing and Supply Chain Conference welcomed 3,000 manufacturing and supply chain industry professionals including over 200 speakers and 170 exhibitors.