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Growing exports will add up to economic success

Rebecca Kincade on March 31, 2015 - 10:36 am in In Depth

We spoke to Sandra Scannell, Business Growth and Trade Director, Northern Ireland Chamber of Commerce and Industry, about why export trade is the key to economic success. 

Exporting is the lifeblood of many successful businesses. Most of Northern Ireland’s leading firms have grown and increased their sales and profits by developing products, services and goods for distribution in markets overseas.

The Republic of Ireland is Northern Ireland’s main trading partner whereas the USA is the main export-trading partner for most other UK regions. Other major markets for Northern Ireland goods are the USA and Canada. France, Germany and the Netherlands are the main EU markets for Northern Irish exports outside the Republic of Ireland.

Sectors leading the field

Engineering and Food are Northern Ireland’s most important export sectors. Machinery and Transport Equipment alone accounts for two-fifths of goods exported. Northern Ireland is the only UK devolved administration to have Food and Live Animals among its top 5 exporting sectors. Other important exporting sectors are Computer, Electronic and Optical Equipment along with Chemicals and Electrical Equipment. Computer Services is Northern Ireland’s largest tradable service.

A key aspiration for Northern Ireland Chamber of Commerce and Industry (NI Chamber) is to contribute to Northern Ireland’s economic recovery by helping businesses, particularly SMEs, to move successfully and profitably into export markets. With this aim in mind, NI Chamber in partnership with Danske Bank is powering ahead with a business support programme called Danske Bank Export First. The initiative launched in 2011, focuses on equipping Northern Ireland businesses with the skills to break into new markets and take their export activity to the next level.

Slow recovery

However, Northern Ireland’s business base has been the slowest of the UK regions to recover from the impact of the recession. Between 2010 and 2014 Northern Ireland’s private sector business base was continuing to contract (down 0.5 per cent against a UK growth rate of 17 per cent).

Whilst there are definite signs of recovery, Northern Ireland companies are still reticent to expand into export markets and this is holding back the growth of many firms who have the potential to perform strongly overseas.

Alarmingly low

The number of companies in the region exporting to international markets is alarmingly low – there are only 1,500 exporters of goods and 60 per cent of Northern Ireland exports are delivered by only 10 companies.

Successful exporters include:

• Moy Park, the Craigavon based poultry processor owned by Marfrig of Brazil, exports poultry products mainly to GB, Ireland and Europe. Approximately 78 per cent of Moy Park’s £1.4bn revenues come from sales to GB and Ireland while 22 per cent comes from continental Europe.

• Ulster Carpets in Portadown is a world leader in the manufacture and export of high-quality carpets for sale to the world’s best known hotels, casinos and cruise liners. The firm sells 70 per cent of its products abroad and is currently undergoing a £30m re-development of its factory in order to meet demand.

• Mallaghan Engineering in Dungannon, designs and manufactures a wide range of ground support equipment including passenger stairs, baggage handling systems and medical access lifts and exports them to airlines across the world.

• Windell in Magherafelt is part of the Henry Group, a construction products group also based in Magherafelt. Windell is a leader in the design, development, manufacture, supply and installation of high security glazing systems. The company services global markets and projects have been successfully completed in Great Britain, Ireland, Indonesia, Bangladesh, Sudan and the USA.

• Wrightbus, the Ballymena based bus manufacturer, exports to international markets including Sinapore and Hong Kong and continues to win contracts around the world. It is also known for supplying its new Routemaster buses to Transport for London in a deal which will bring the total fleet in London up to 800 by the middle of 2016.

Research into challenges

NI Chamber recently commissioned research into the challenges facing potential and current exporters.

It found the biggest challenges for potential exporters are in relation to finding/understanding overseas customers; the fact that their business is too small; finance requirements (for example access, cashflow and currency); having the right management/staff skills and export costs including logistics.

For existing exporters, the biggest challenges are inadequate market intelligence; developing/maintaining the necessary skills to export; and finance requirements. In addition the Northern Ireland support system is fragmented and difficult to navigate.

Actions needed

This is recognised by the Department for Enterprise, Trade and Investment (DETI) which is currently developing an Export Action Plan – with participation from NI Chamber. The Export Action Plan is designed to increase the level of exporting activity in the economy and, in turn, result in productivity gains for Northern Ireland.

Potential actions required include educating firms on the cost of doing business internationally; direct targeting of potential exporters; and making businesses more aware of export finance support which is available through a variety of agencies.

NI Chamber believes that in order to support a strong export culture and develop a global reputation for Northern Ireland as an open and a competitive trading region, a coordinated and integrated export support system must be implemented across central/local government and the private sector. Without this, our economy risks lagging even further behind other areas of the UK as our competitors seize opportunities in overseas markets.

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