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Seanad Special Committee on the Withdrawal of the United Kingdom from the European Union debate -
Thursday, 4 May 2017

Engagement with Enterprise Ireland

I welcome Mr. Kevin Sherry, Mr. Garrett Murray and Ms Anne Lanigan from Enterprise Ireland.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

I invite Mr. Sherry to make his opening remarks.

Mr. Kevin Sherry

I thank the Chairman for the invitation to attend this morning. I am joined by my colleagues Mr. Garrett Murray, the department manager for policy and government relations, and Ms Anne Lanigan, the department manager in our Brexit co-ordination unit.

Enterprise Ireland supports indigenous companies in every region of Ireland to start and scale their business, to innovate and to win business in international markets. We focus on the manufacturing and internationally traded services companies, which are a critical source of existing employment and job creation in every county in Ireland and are spread across a wide range of sectors.

On 9 January 2017 Enterprise Ireland announced that during the driving enterprise, delivering jobs strategy over the period of 2014-16 - our three year strategy period - 45,592 new jobs were created by our client companies. This brings the total number of people employed by companies supported by Enterprise Ireland to 201,108. This is an all-time high for the agency. It is the first time we exceeded 200,000 jobs. In 2016, which was the last year of that strategy, a total of 19,244 new jobs - full and part-time - in Enterprise Ireland supported businesses were created. Almost two thirds of these new jobs, 61%, were outside Dublin, and all regions recorded increases in employment. This translates into a net increase of 9,117 jobs for 2016, taking account of job losses.

The contribution of Enterprise Ireland client companies to the domestic economy is very important, particularly from a regional perspective, as it sustains over 300,000 direct and indirect jobs. Enterprise Ireland client companies' exports were €20.6 billion in 2015 and we are currently compiling the 2016 export figures. The UK delivered the second fastest growth rate in 2015 at 12% and the food sector accounts for half of those export figures to the UK at €3.7 billion. The total spend of Enterprise Ireland clients in the Irish economy across payroll, goods and services purchased, reached €23.7 billion in 2015. Enterprise Ireland has set a €22 billion export target for 2016. The results of our annual business survey 2016 will be finalised in the near term.

Exports to the UK as a proportion of our total client exports declined from 45% in 2005 - a decade ago - to 37% in 2015, as more of our client companies have diversified their export strategies into northern Europe, the USA, China and the Gulf region. We expect this trend to continue. Supporting clients to diversify their exports while also growing exports in existing markets including the UK - our nearest market - has been a central pillar of Enterprise Ireland strategy for over a decade. In 2015 there were 1,476 Enterprise Ireland client companies that recorded exports to the UK and between them these companies employ some 100,000 people. This represents half of the total employment of Enterprise Ireland clients. The sectoral breakdown of these 1,476 companies is as follows: food at 15%; ICT and international services at 40%; and industrial, life sciences and consumer at 45%.

Irish exporters are significantly impacted by Brexit and over 600 of the 1,476 companies generate over 20% of their turnover from the UK market.

It is expected that the UK will remain the largest market for Irish exporters in the short term. Enterprise Ireland’s focus on supporting our clients to sustain and grow exports in the UK and in other established and high-growth markets will continue.

In January this year, we published our strategy for the period 2017-20. This strategy was specifically developed in the context of Brexit and focuses on supporting clients to both build scale and expand reach, in other words, to diversify. The strategy sets ambitious targets out to 2020 including to sustain and grow jobs in Enterprise Ireland client companies to in excess of 220,000 and €26 billion in exports. The objective is that at least a 50% growth in exports would be outside the UK. We have set a target of increasing the annual total spend in the economy by Enterprise Ireland client companies to €27 billion, as well as increasing their direct annual research and development spend by 50% to €1.275 billion.

The UK vote in June 2016 triggered a period of uncertainty for Irish business and this has continued. The primary cause of uncertainty since then has been currency volatility. However, in the medium term, the outcome of the negotiation process and the new trading structures that will exist thereafter may provide further challenges.

The devaluation of sterling impacts differently on companies in different sectors in different ways; it is not uniform. Some companies are hedged through their banks and others are naturally hedged, so Brexit impacts on all sectors in different ways. What is clear is that the devaluation of sterling and any other impacts of Brexit will not be temporary and will require a strategic response from Irish exporters and from Enterprise Ireland.

The challenge is significant in terms of exchange rate volatility. We have been here before in 2009 when the euro and sterling were near parity. Irish companies, while severely challenged during that period, took actions that assisted them to respond to the movement and overcame that challenge.

Enterprise Ireland's focus in the immediate aftermath of the vote in June 2016 was to set up a helpline and directly reach out to our clients. Since then we have taken many actions including working with clients, company by company and sector by sector. We have developed a new guide to exporting to the UK, and a webinar on currency volatility and hedging. In addition, we have promoted global market opportunities in the media through our global ambition campaign. We have prepared a guide to exporting to the UK, which will continue to be a very important market.

We have published a revised schedule of trade and investment missions for the second half of 2016, which we implemented, and published a trade and investment mission schedule for this year involving over 145 trade missions and international trade events.

We have worked closely with local enterprise offices through our Brexit and competitiveness units to support LEO clients. We have worked through our parent Department and other Departments to ensure that any issues raised by our clients are highlighted in the policy system and are addressed. In addition to many other actions undertaken, we have refined and promoted our own client offering to support client growth strategies.

Enterprise Ireland has advised, and will continue to advise, our clients to prepare for a hard Brexit. That is our advice, but if it is better than that, it will be great. Companies are alert to the challenges posed by Brexit, but not all of them are taking action as yet. Our focus continues to be on supporting companies on a one-to-one and on a sector-by-sector basis to enhance their competitiveness and capability and build on their success in existing and new markets.

Enterprise Ireland is focusing on four strategic areas of action: innovation and research and development; competitiveness; financial management; and expanding reach, in other words, diversification. We are working systematically with clients through our client engagement model to support their priorities and actions. Our overseas offices will continue to work with clients in a range of market areas focused on winning business. A focused eurozone strategy will be launched in the coming weeks. On 31 March, Enterprise Ireland launched our Brexit SME scorecard, a new interactive online platform which can be used by all Irish companies to self-assess their exposure to Brexit under six business pillars, where they have not already done so. Based on the answers those companies have supplied, the scorecard generates an immediate report which contains suggested actions.

By completing the online questionnaire, the Brexit SME scorecard will provide companies with an assessment of their preparedness. The tool is a starting point for SME management teams looking to develop an action plan to help mitigate risks and leverage opportunities which may arise from Brexit. While the SME scorecard is available to all companies, Enterprise Ireland client exporting companies that utilise the Brexit scorecard will then be able to engage with the agency’s experts both domestically and through the overseas offices in global markets. Enterprise Ireland will provide funding up to the value of €5,000 to exporting clients to support the development of a business action plan. Enterprise Ireland will work with those companies on a one-to-one basis to support the implementation of the plan. The roll-out and marketing of this initiative is being complemented by a schedule of regional events. Over 420 companies have already completed the Brexit scorecard.

Enterprise Ireland will continue to directly implement our strategy, Build Scale, Expand Reach 2017-2020. We will work closely with others, including other governmental and non-governmental bodies to support our clients to overcome the challenges of Brexit and build on their ambitious strategies to sustain and create jobs throughout Ireland.

Before calling on my colleagues, I will ask a brief question myself. Mr. Sherry referred to helping EI's clients to seek and target new markets. What are the ideal target markets and where should the Irish economy be looking in order to expand post-Brexit, either through potential new EU trade deals or in markets where we have an existing footprint but where there is also more scope in which to develop?

I am aware of the time constraints so I will be brief. In the past I have had dealings with Enterprise Ireland. When it comes to exports, its criteria for SMEs are off-island and it does not tend to consider Northern Ireland. A company with which I was involved did a lot of business in the North and has suffered a lot through currency exchanges. However, when we knock on Enterprise Ireland's door it is not considered an export because it is not off the island. In light of what Mr. Sherry has said, will he plan for the worst and hope for the best? In planning for a hard Brexit, that is, the possible reintroduction of customs posts at the Border, would Enterprise Ireland have a strategy for supporting companies that do a lot of cross-Border business?

I welcome our guests and agree with Mr. Sherry's strategy that it is good to prepare for a hard Brexit, while hoping that it will be otherwise. We very much hope that it will be otherwise, but it is nonetheless important to prepare for the worst. Coming from the Cavan-Monaghan region I am concerned about the implications of Brexit for a number of enterprises that Enterprise Ireland supports there. The implications could be devastating. I was reminded recently that Lakeland Dairies, a major milk processor in our area, sources quite an amount of milk north of the Border. Were customs duties and tariffs to come into play, it would inevitably be forced to create a new plant north of the Border with a dislocation of jobs in the South and extra levies on farmers to support that plant. If not, its suppliers would have to cope with customs duties and tariffs. That is the kind of dilemma that is being presented in our area.

I am interested in Mr. Sherry's figure that 225 companies or businesses with which Enterprise Ireland is involved are in the food sector.

I suspect many are in the Border region. Will Mr. Sherry comment on the number in the Border region? Will he outline what sort of practical supports Enterprise Ireland can continue offering? What would he recommend to the Government in terms of support for these enterprises in the lead-up to Brexit and post-Brexit? The obvious direction is the expansion of markets, and one of Enterprise Ireland's objectives is to achieve a 50% growth in exports outside the United Kingdom. I echo the question put by the Chairman. Where does Enterprise Ireland see the best possible locations to achieve this growth?

Is it the case that because of our fixation on business to China, and it is a market with extraordinary potential, nobody questions the efficacy of that pursuit? Taiwan has a population of 24 million and is a prosperous and growing economy. We may be missing that market in our anxiety not to upset the Chinese. I understand that may not be the case for other European countries who trade freely with Taiwan, still trade with China and have a gateway from Taiwan to China. It is only one theatre of operations. I would be interested to learn where Enterprise Ireland would site the expansion of our exports, particularly in the food sector. I see the food sector taking the big hit in the Border region.

A point I made to a colleague is that we will not be able to replace the jobs in the small food enterprises as it will be difficult to locate other jobs in the small towns and villages in which these enterprises are based. This exacerbates the problem.

Would Mr. Sherry comment on the currency and how sterling impacts on the mushroom industry? The mushroom industry came under major threat from the sterling factor. What specific efforts can be made for that industry? Enterprise Ireland works sector by sector and company by company. My experience as a public representative of making introductions and dealing with Enterprise Ireland and firms that are working with Enterprise Ireland is very positive. I have heard nothing but good things.

Research and development are critical to deploying exports elsewhere and to diversification. Will Mr. Sherry expand on that and on how we can achieve more?

I thank Senator O'Reilly.

I thank the witnesses. Their presentation is an excellent example of an organisation that is up and running and is ready to meet the challenges of Brexit. I congratulate Enterprise Ireland on that.

An issue I have raised with every group I have met during our meetings on this topic is the issue of a hard and soft Brexit. It will be an extremely disorganised Brexit rather than hard or soft. Some elements may be hard and others soft and some elements may take years to resolve. That is a particular problem for me.

I congratulate Enterprise Ireland on the scorecard. Organisations working through Enterprise Ireland have a place to go to which will give them some indication of where they stand as they move forward.

Does Enterprise Ireland have sufficient resources to provide all the supports it needs? Is there anything it wants from Government or from the Oireachtas which would ease the work it is doing or support it in a better way?

In respect of market diversification, the figures Enterprise Ireland has given for our reliance on the British market are generally macro figures. When we get down to the micro level, Brexit may be fatal for some organisations. A question that was put to me some time ago was the case of the small artisan or single product producer, such as a husband and wife team working on the production of cheese which they export to the United Kingdom only. They do not have the resources to put a marketing organisation in place. Does Enterprise Ireland see a need for a separate marketing group to provide marketing for small organisations that cannot provide for marketing? I am not sure how it would work.

At present, because of the Border, we have raw materials coming from one part of the jurisdiction into another jurisdiction with some processing taking place and the product going across the Border to be completed. That would seem to be a problem if tariffs were to apply on the way in and on the way out. My constant plea is for solutions. Has Enterprise Ireland a solution that we can offer to Michel Barnier and the various other negotiators that will help us overcome those types of problems? We cannot have a situation where we are paying tariffs on both sides. We also have the ridiculous situation where a farmer has cattle in Northern Ireland in the morning and in the South in the afternoon. That does not bear thinking about.

I thank the witnesses. Its presentation shows that Enterprise Ireland has its foot on the pedal and is working hard. I congratulate it. I am very pleased with it.

High and worthy praise.

I thank the witnesses for attending today. It is very clear our indigenous companies dealing with Enterprise Ireland are in a different situation from the foreign direct investment companies that are not going to have the same adverse impact arising from Brexit. The indigenous sector is more highly dependent on the UK market and faces a significant fallout.

Enterprise Ireland has described one of its strategic areas of action, namely, innovation and research and development. I believe it is the case that there is more innovation, research and development in foreign direct investment companies than in indigenous companies. I see that in a comparison of Irish indigenous companies with indigenous companies in other countries, we are falling behind in research and development. Why is there not the same level of interest or activity in research and development? Is it to do with cost?

Does Enterprise Ireland match education and training needs of citizens with the needs of the companies it attracts to Ireland? To what extent is Enterprise Ireland being asked to engage with educational institutions? I am thinking in particular of the IT colleges where a recent study shows that the ambition is that there would be more of a correlation between the needs of business and the types of courses offered. It also shows that the institutes of technology would be an integral part of economic growth for these companies. Is this happening?

Do the staff of Enterprise Ireland meet boards of management, governing bodies or departments in the colleges? Is it pretty specific or is it a high level notion? It is important to grow the institutes of technology and also to grow the businesses.

How does the number of start-up enterprises in Ireland compare with those in other similar countries? The view is that we are not seeing the same number of start-up businesses or entrepreneurship in our indigenous sector.

I know that Enterprise Ireland has a drive to scale up companies, but there is also the problem that many Irish companies sell out once they get to a certain point. If the business continues and grows, that is good and well, but if it sells out and goes somewhere else, that is not desirable. What does Enterprise Ireland do to counter that?

The witnesses from Enterprise Ireland are most welcome and I thank them for attending today.

One of the issues in relation to trading in goods between Ireland and the UK was mentioned here by the former Taoiseach, Mr. Bertie Ahern, namely, the possibility of having a common trading area. Indeed, Senators Mark Daly and Joe O'Reilly have mentioned the possibility of special arrangements in respect of cross-Border trade. If there is to be a special economic zone, either for Northern Ireland or for the whole island of Ireland, with special trading rights vis-à-vis the United Kingdom as part of the imaginative and flexible Barnier proposals, who is thinking about that? Is it the Department of Jobs, Enterprise and Innovation? Is Enterprise Ireland involved in a dialogue on that? Where in the Government is the thinking on that concept going on? Is it in the Department of An Taoiseach? Is Enterprise Ireland being consulted or being asked for input into the imaginative and flexible solutions that the former Taoiseach, Mr. Bertie Ahern, and various other people were talking about in terms of dealing with the island as an economic unit or having special arrangements with the United Kingdom? Who is actually working on that scenario or possibility? Is Enterprise Ireland being fully consulted on such matters?

Some of my questions are along the same lines. First, regarding what Senator Paul Daly said about not supporting companies that want to trade with the North, is Enterprise Ireland going to look at that issue? In terms of proposals from Enterprise Ireland on imaginative solutions which the EU is seeking, has the organisation looked at replicating or seeking to replicate the trading arrangements between West and East Germany prior to reunification? In that scenario, East Germany was treated, effectively, as a member of the European Community, without anybody formalising that. Could that be used as a precedent for a trading arrangement between the North and the South of Ireland?

Mr. Kevin Sherry

I thank the Senators for their questions. I will start with the Chairman's question about ideal target markets. Unfortunately, when we look at ideal target markets, it is somewhat complex in that we have to look at each individual sector and at individual companies to identify what might be the most appropriate growth markets. Different sectors have different dynamics so we have been working on it sector by sector. I mentioned that in 2015 exports to the UK grew by 12%. While we have not finalised our figures for 2016, growth certainly will not be at that level. The US grew in the same period by 27% and we would view the US as a very fertile and substantial opportunity for many companies in a range of areas including ICT, services, life sciences and medical devices. There is less of an opportunity for food except in terms of non-perishables like infant milk formula. It very much depends on the sector but we would certainly see the US as a substantial growth opportunity.

Irish companies have benefited from substantial and continuous growth in the Asia-Pacific market. We have seen substantial growth in China in the general area of food but particularly in the area of infant milk formula. Ireland exports a lot of formula to that market, where the demand is very high and prices are strong. We see substantial opportunities in that market for companies in the dairy area. We have also seen growth in certain parts of the Gulf region, particularly in the United Arab Emirates, in areas where Irish companies have products and services that are in demand in those regions. We are seeing growth in sub-Saharan Africa and South Africa in some sectors.

What we are doing is segmenting it, market by market, sector by sector. We must look closer to home for some of the sectors that are more vulnerable. One factor at play in that regard is the transportability of products. There are particular product areas that are very vulnerable because they are highly exposed to the UK and are not easily transportable. I am speaking here about areas like timber, construction products, pre-cast concrete and a whole range of other areas. Those companies are facing different challenges because it is not as easy to go into alternative markets. What we are doing for such companies is focusing very strongly on improving their competitiveness and also looking at investing in research and development to enable them to move up the value chain, in the sense of getting into areas of premium product where they can differentiate themselves. That is possible but it takes time and investment for companies.

There are substantial market opportunities for many companies. Some companies will be able to take their existing products and services and transport them into other markets. However, in many or even most cases companies will need to invest in modifying the product or service in order to make it suitable for the particular characteristics of the new market. In other cases, unfortunately, given the transportability of the products and their nature, opportunities in more distant markets, such as the US, the Gulf and Asia-Pacific regions, will be more limited.

Senator Craughwell asked if Enterprise Ireland has the resources it needs. Enterprise Ireland has been allocated an additional €30 million in the current year towards the activities it is undertaking, principally in the area of supporting companies in response to Brexit. We got an allocation of an additional 39 posts for which we are currently actively recruiting and we are bringing people on board specifically for that agenda. Obviously, we are in continual discussion with our parent Department about the deployment and optimisation of our resources. I will ask my colleague, Mr. Garret Murray, to elaborate on that point.

Mr. Garrett Murray

In terms of diversification, we are also launching a eurozone strategy in the coming weeks. Obviously, there is a currency benefit there and less of a risk and there is a very significant focus on that aspect. We have gone through it, company by company, sector by sector, to determine how we can maximise impact. In terms of resources in general, we asked for 39 posts and got them. In fairness, there was a dialogue involved and we had to outline what we needed the posts for and where the resources would go. What is important is that we are preparing competitiveness here before companies go overseas as well as supporting them within the market.

In terms of innovation, two of the new posts are related to Horizon 2020 and how we can maximise the European money that is available and link our SMEs into that innovation base to try to increase their innovative capacity. It is absolutely critical, in terms of product development, to focus on research and development. That is about Enterprise Ireland, as well as the companies, making it simpler for companies to apply for research and development funding and to understand it better. We have a significant focus on that area. We are looking at how our products can be marketed to our clients to make it easier for them to apply.

Does Enterprise Ireland help companies with that?

Mr. Garrett Murray

Yes, absolutely. Our research and development committee sat this morning and looked at a plethora of SMEs who are looking for research and development funding that would already have been approved. Many of these are companies that are moving in a new direction and going from a service to a product or looking at new markets. It is key to our agenda and how we sell that to our clients is important. Brexit has made companies realise the importance of innovation.

Mr. Kevin Sherry

Just to expand on the research and development issue, we set ourselves a target of increasing by 50% the spend of companies on research and development. We have also repositioned our own offering to make it as simple as possible for companies to engage and to try to leverage to the maximum extent the investment that is being made in basic and applied research so that companies can access technology and investment in research that is being undertaken in the institutes of technology and universities. In that regard, one of the supports we provide is the innovation vouchers scheme where vouchers are, effectively, cashable with the institutes of technology to leverage the skills that are available. That is a widely used scheme and is part of our step-by-step approach to encouraging companies to go down that route. It is particularly aimed at those early-stage SMEs that do not have the same level of resources as larger companies.

We are heavily engaged with the institutes of technology on the specific needs of companies and are working closely with them in the area of skills. A good example of that is in Limerick where we are working with the colleges on the availability of engineering skills. There is close collaboration on the available flow of skills. The collaboration between employers in the region is highly connected with the colleges there so that suitable graduates who are readily employable emerge from those colleges. It is a key agenda for us.

I have some expertise in the area of institutes of technology. Does Mr. Sherry find they have sufficient resources in the research and development area? They have not been funded well in research and development. They have been excellent in delivering educational programmes but is there a greater need in the area of research and supporting industry? I do not know if it is a question Mr. Sherry can answer.

Before Mr. Sherry responds, Senator Mulherin has indicated.

Is engagement with ITs and third level colleges on an ad hoc basis? Does it happen because a business comes in or is there an ongoing dialogue? Are we planning into the future or is it just reactionary on a hit and miss basis?

Mr. Kevin Sherry

It is planned. It is part of the agenda of our local regional offices and the regional director in engaging with the institutes of technology and the universities in the region. It is a key part of the regional action plan for jobs and the regional action agendas that the skill requirements of companies in the region are addressed by colleges in the region. In certain areas such as ICT, there is a global shortage so competition in the area is fierce. It is a question of having to increase the overall supply.

Mr. Garrett Murray

The central question is whether it is strategic or operational and actually happening. On a strategic level, there is an enormous amount being done with education and probably more than I have ever seen in my time in the agencies, particularly on the national skills fora. On a regional level, they have brought the agencies - Enterprise Ireland, IDA Ireland and others - and our regional representatives, the colleges and, most importantly, the companies together. It is not just us going into the colleges saying we need X, Y and Z in the region; it is building the relationship between the companies and the colleges so they are listening to each other. We take the view that in the past the colleges have listened a bit more to FDI companies because they are larger in many cases. We are trying to shift that relationship.

On Senator Craughwell's point about funding for the ITs, the HEA is currently doing its review of funding for the higher education sector. In our submission to that, we will be saying the importance of the ITs in terms of research is critical for SMEs. That is not to say it is not important for universities but we want to strengthen the relationship with the local ITs. The regional skills fora have worked quite successfully in this regard and we are fairly happy with the structures.

Mr. Kevin Sherry

I will respond to Senator Mulherin's question on start-ups and how we compare in that area. Enterprise Ireland has focused on supporting internationally focused start-ups. Last year, in terms of spin-outs in third level institutions, we had the highest level of new start-ups so we are very pleased about that. In that area, we focus on specific sources of start-ups and work with them to try to increase the number in that area and also the number that achieve scale. A good example of that is in the female entrepreneurship area. If one goes back five years, about 7% of the high potential start-ups we supported were led by female entrepreneurs. Last year, it was closer to 28%. Internationally the figure in the ICT area is typically around 8%. We have much more to do but we have seen that when we take specific initiatives and specifically focus on an area, we get a result.

We are also seeing an increase in the number of start-ups led by entrepreneurs coming from outside of Ireland into Ireland to start their business. We have a specific focus on encouraging entrepreneurs from regions outside Ireland to look at Ireland as a location. When entrepreneurs are starting a business, increasingly they can make decisions on locations. Even if they are from Ireland, there is a decision on whether they will start the business in Ireland or look at other international locations. There is a constant challenge to these companies staying Irish and scaling their business. The availability of development capital is a key factor in that regard. If there is strong availability of development capital and venture capital in Ireland, there is a better chance that those companies will stay and grow a scale as indigenous Irish companies. We are particularly focused on ensuring its availability and encouraging international VCs to partner with funds that Enterprise Ireland is involved in supporting in Ireland.

I will address the implications of Brexit for the food sector. Senator Reilly raised the question of the Border region and mentioned Lakeland Dairies. There is no doubt the food sector is an area that potentially will be particularly impacted by Brexit and the outcome of the discussion on tariffs and cross-Border trade. If we look at the 600 most vulnerable companies, the Border region accounts for a little under 100 of those companies, which between them employ a little over 10,500 people. The food sector is an important sector within that. I mentioned China earlier and companies in the dairy industry are looking to produce high value products such as infant formula and being able to look at other markets. If one takes a company like Lakeland Dairies, in terms of logistics the number of cross-Border shipments even on a weekly basis is substantial. We are very concerned about tariffs or associated additional costs involved in the logistics and trade associated with it. When I talk about working sector by sector, it is something we have been discussing with our parent Department and with Bord Bia which has also worked with us on the food sector.

I will address the question Senator Daly asked about Northern Ireland. We regard it as on-island trade. Our focus with companies at the moment is to assist them to prepare for international markets. As it stands, our approach is to prepare for a hard Brexit. On-island cross-Border trade would face significant additional challenges to what it is currently facing. In terms of support for those types of companies, we are working intensively with companies involved in cross-Border trade but which are not exporting much beyond those shores. We have an agenda with many of those companies to encourage them to look at additional markets. It is part of our issue.

On the sterling issue, Senator Reilly mentioned mushrooms. It is a particular area that was first impacted. I will ask my colleague, Mr. Murray, to comment on it.

Mr. Garrett Murray

We are working with Bord Bia on food and the direct relationship. We put a lot of focus on applying our expertise on Lean. We brought a cohort of mushroom companies together and provided them with a Lean grant to work with Bord Bia to try to improve their competitiveness. That is what we have been able to do with them. Bord Bia had been working separately with them in terms of new markets and development.

Mr. Kevin Sherry

I will address Senator Daly's question on the replication of a trading arrangement similar to East and West Germany and also Senator McDowell's question on a common trading area. Enterprise Ireland's approach to this has been that any sort of barriers that exist in trade and freedom of trade is not good for our client companies. We see that as an issue. Ideally, we would like the current position to pertain, but that is not the case. We have fed strongly into our parent Department and to other Government Departments that are looking at this issue. We have also seconded one of our colleagues to the Department of Taoiseach to specifically focus on the sectors where we feel there is strong vulnerability in terms of Enterprise Ireland client companies.

We are working across Government in terms of the inputs to that agenda. My colleague, Mr. Garrett Murray, may want to contribute further on that.

Mr. Garrett Murray

There is a structure across Government in respect of committees. We put forward the point that the nearest to the status quo is what we are looking for. It is for policymakers in Government to decide how they are going to position that from a negotiation perspective but that is certainly what our clients and companies are looking for. When one goes through different areas of the negotiations, different sectors will have different priorities. Our priority will be to make sure that the policy system is aware of those as they emerge when contingencies are being discussed.

It is a live issue.

Mr. Garrett Murray

Absolutely.

Mr. Kevin Sherry

Senator Craughwell also spoke of artisan producers and the support for those types of companies. One challenge we see in the marketplace at the moment, undoubtedly in the food area, is that companies supplying into the UK multiples are seeing an increased move towards initiatives such as Red Tractor, which is about buying British. We have seen this in the beef sector and in some other areas. Some of the options the companies in the food area must consider - we are in discussion with Bord Bia on this - include the question of whether they can look at other verticals, such as the food service areas, as opposed to the retail side. When one considers the beef area, which is very different from the artisan area, €1 billion of the €7.5 billion sales to the UK is in beef. Were the WTO tariffs to apply to beef, Irish beef producers would face a big challenge. The question of what ultimately emerges in respect of tariffs is a huge factor. We must bear in mind that the UK is a big net importer of food in its requirement and need for food. As Ireland produces enough food to feed a population of around 30 million and is a big net exporter of food, these factors are at play. There is a need to help artisan food producers and those companies that can produce premium products to look at other European markets and to look at channels other than retail.

Senator O'Reilly referred to Taiwan and the opportunities in China and the Asia region. Enterprise Ireland has three offices in China: Beijing, Shanghai and Hong Kong. We currently service the Taiwanese market from our office in Hong Kong. With regard to the scale of the Taiwanese market, we also have a pathfinder. This is a trade consultant who works specifically with us in accessing that market. We cover a number of the smaller markets from those offices. We are very focused on working company by company and sector by sector. We have companies who are exporting into Taiwan and we would see opportunities in that area. It is not yet at a scale that would justify Enterprise Ireland opening a separate office in Taiwan. We keep that situation under constant review but we are driven by matching the opportunity in the market with the capability of our client companies. Where we identify opportunities, we will work with them to go after those opportunities, not just by diversifying out or lessening the dependence on the UK, but also in looking at the opportunities that are there for growth in the long term.

I do not know if this has answered most of the questions but I will ask my colleague, Ms Anne Lanigan, to speak on the work we are doing on some regional initiatives and roadshows that are running now - we had one in Cork yesterday - and what is coming out of those initiatives.

Ms Anne Lanigan

The focus with our clients currently is to encourage them to prepare as much as they can for Brexit. There is a sense that there is a lot of uncertainty and we are not sure what is going to happen, so there is a risk that companies will not take action. We are very much encouraging them to prepare, and to prepare for a hard Brexit. That has been the objective behind the scorecard. We have a regional roadshow that we started in Cork yesterday. We will go to Waterford, Monaghan, Galway and Limerick over the next month to encourage companies to see what their peers are doing. We bring in clients who we have seen reacting to Brexit in the right way by putting measures in place. That is a real focus for us. The scorecard is available to all companies and it is not just for Enterprise Ireland clients. We have a grant that is specific to our client base but the scorecard is available to all. I encourage all members to use it as anyone can do so; one just needs to log in and create a password. It is worth doing to understand the different areas of exposure for businesses. There has been a lot of focus on the currency, which has settled at 85p to the euro at the moment. Many of our companies say they can cope with that rate but we need to get them to look beyond that and into the other areas where they may be exposed, for example, if there was a downturn in the UK economy or an issue affecting their supply chains. There is much talk about the North-South issues, which are very important to us, but there is also the east-west aspect and the customs and barriers we expect to come into play there. These are all part of what we call the nine areas of exposure. We focus on those areas and try to translate them into what it will mean for each of our companies.

When the representatives get back to their offices, will they provide us with the dates of those roadshows and the locations? It might be interesting to sit in on one of those to see what is going on.

Ms Anne Lanigan

Certainly. The dates have been decided and we will forward it on to the committee. We encourage members to attend the roadshows. They are very welcome.

I thank Ms Lanigan. I was going to ask the same question as Senator Craughwell - great minds. I thank all three representatives from Enterprise Ireland for their extensive answers to the questions and for the original presentation by Mr. Sherry. It was very on point and exactly what we were looking for. As Senator Craughwell said earlier, I want to commend the effort of Enterprise Ireland, especially since its mild expansion post-Brexit. It is really encouraging to see the work ongoing. I thank the witnesses again.

Sitting suspended at 12.07 p.m. and resumed at 12.13 p.m.
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