Planning for the worst, hoping for the best

Sep 28, 2017
Enterprise Ireland’s Julie Sinnamon is preparing for a hard Brexit, but that isn’t the only challenge on her agenda.
 
When Julie Sinnamon assumed the top job at Enterprise Ireland back in 2013, Ireland was steadily crawling out of a recession and the future looked bright. Now, in the aftermath of the UK’s decision to leave the European Union (EU), many of the state agency’s clients have a fight for survival on their hands. Sterling is on a seemingly inexorable downward path, with parity with the euro by Christmas not such an outrageous proposition. Meanwhile, the very terms of the UK’s divorce from the EU remain uncertain, raising fears about possible customs and tariffs on Irish exports to the UK.

Unlike previous crises, Sinnamon is clear that this is not simply going to go away. “It’s not a blip; it’s a permanent restructuring of Irish enterprises in global enterprise,” she says, refusing to sugarcoat the challenge ahead. “It’s a massive problem for Irish companies,” she says, adding that with sterling having touched 93p to the euro, “it’s really difficult”.  What Brexit might mean for Irish exporters is as yet unclear; but what it most definitely does mean for Sinnamon and her staff at Enterprise Ireland, the agency responsible for developing and growing Irish companies in global markets, is a sharp uptick in its activities.

A perfect storm

Sinnamon recalls the day it all changed. On 23 June 2016, she went to bed before midnight with the polls showing a win for remain. Three hours later, she was woken from her reverie with news from her husband that it was going the other way. Born in Co. Down and a graduate of the University of Ulster, Brexit also has a personal dimension for Sinnamon. “I realised it was real, and it was a matter then of looking at what we had prepared... and it’s been hectic ever since,” she said. Indeed, Enterprise Ireland has since recorded a 50% increase in its internationally-focused work. But while Brexit may have all the makings of a perfect storm for Irish exporters, Sinnamon and her team are taking a common sense, practical approach to helping companies weather that storm in the coming years.

According to Sinnamon, the approach is three-pronged: first it’s about boosting competitiveness, then working on innovation, and finally helping companies diversify their market footprint. On the competitiveness front, it’s about cutting costs – something many Irish companies have experience of coming out of the most recent downturn. “A lot of the stars of Irish industry would not be here today if it hadn’t been for working on the lean programme,” she says. However, given that this happened in the recent past, it also means that there isn’t much “low hanging fruit” left to be picked as many companies have already removed excess costs. This means that innovation may be even more important this time around. As Sinnamon notes, enhancing the product offering can enable a company to charge a higher price – and this is a “massive part of the solution”.

Entering new markets is also part of the strategy, with Sinnamon citing role models such as forklift manufacturer Combilift’s expansion in Germany and animal pharmaceutical producer, Chanelle, working on expanding from the UK to Europe. “We’re working to help companies diversify, but it takes time, particularly the more sophisticated your product is.” Nonetheless, Enterprise Ireland and its client companies are making headway, with a clear goal to boost exports to the eurozone region by 50% by 2020 while exports to New Zealand, Australia and Canada are growing strongly.

“Companies are increasingly showing interest in those markets,” Sinnamon says. And even if the UK market has become more challenged, companies are also finding opportunities with Sinnamon pointing to some companies who may have traditionally gone to the southeast of England seeking out more lucrative work in the north of England and Scotland.

International markets week, held in early September, is a key part of this approach as all of Enterprise Ireland’s international team comes home to talk to Ireland-based companies about the opportunities around the world, hosting over 2,000 meetings in just two and a half days.

Taking action

When it comes to Brexit, one problem has been the reluctance of Irish companies to take action. In the aftermath of 23 June 2016, people tended to think that “common sense will prevail”, Sinnamon recalls. With Brexit negotiations in full swing, companies now need to rise to the challenge – even if they don’t know what a Brexit will actually look like. 

“Nobody knows where it’s going to end up, but I keep saying – and have said so from the start – that the actions you take are for a hard Brexit,” she says, adding that even if this doesn’t end up being the case, it makes good business sense to be “as competitive as possible”.

Somewhat surprisingly, however, given currency fluctuations, Sinnamon notes that while the larger companies are hedging their currency risk, many smaller ones still aren’t doing so. “We’ve had companies saying maybe it will get better; today it’s 92/93p so we’re going to wait till it comes back down.”

One way companies can assess their level of preparedness is to check out Enterprise Ireland’s Brexit tool on its website, which takes about 15 minutes to complete. It shows where you might have the biggest issues and by going back to it in three to six months, you can review your exposure. Enterprise Ireland is also offering a consultancy grant for companies who need help in putting a plan together. “If the relationship with the UK changes permanently, then you need to have a plan. Then it’s about innovation, about becoming more competitive, and out of that will come lots of actions,” advises Sinnamon. Government support is also helping, with Enterprise Ireland getting approval for 39 new staff members last year, about half of which have been placed overseas, while the Government also plans to double Ireland’s overseas diplomatic presence.

Enjoying the role

But it’s not just about Brexit. Coping with the challenges it brings is just one arm of the state agency, which also has other targets on its mind. And bringing companies into new markets has gotten easier with the good reputation Ireland now has at an international level for its economic recovery. “I came into this job in 2013 and we were still talking about the downturn and apologising globally for the issues we had whereas today, if you’re being introduced anywhere in the world, people will talk about the Irish turnaround,” notes Sinnamon.

Indeed Brexit is not the first challenge Sinnamon has seen during her years with Enterprise Ireland. She first joined the enterprise agency when it was established back in 1998, having previously spent 10 years on the other side – targeting international companies to move to Ireland through her work with the IDA. For Sinnamon, the joy in her current role is seeing client companies succeed against tough global companies. “It’s seeing companies grow from small companies and seeing the impact of those [companies],” she says.

Leading women

Of particular interest to Sinnamon is encouraging female entrepreneurs. When the top job at Enterprise Ireland first came, she concedes that she had to think about whether or not it was something she really wanted. “I’m probably no different than anyone else in terms of a lack of role models,” she says, noting that women have to convince themselves that they can make it work rather than trying to emulate readily identifiable role models who they can clearly see have already made it work.

Now, Sinnamon is helping female entrepreneurs find the ambition within themselves, and her efforts are starting to pay dividends. Back in 2011, just 7% of Enterprise Ireland’s start-ups had a female founder. Fast forward to 2016 and the figure has jumped to 22% – a figure that compares well to international standards. TechCrunch, for example, found earlier this year that just 17% of start-ups worldwide had a female founder. But there is still a difference that Sinnamon is hoping to erase. “The applications we get in from women are typically smaller projects,” she says. “The lack of ambition and confidence is a real issue, so we put a lot of focus on spotlighting successful ones.”

Sinnamon likes to tell female founders that “your projects are important, but at least as important is the impact you will have on female entrepreneurs going forward.” Also of assistance are Enterprise Ireland’s efforts to encourage more females to take the step of starting their own business. This year, for example, Enterprise Ireland has a €750,000 start-up fund for female entrepreneurs with up to €50,000 equity funding available.

Scaling up

While Ireland has undoubtedly been successful in creating a start-up hub, one area where it hasn’t quite risen to the challenge is in helping start-ups to grow into world leaders. Flotations on the Irish Stock Exchange remain few and far between while companies like Strype, the $9 billion payments service founded by Limerick brothers Patrick and John Collison, have opted to locate in the US rather than Ireland.

Sinnamon is aware of the challenges and notes that Enterprise Ireland is increasing its focus on this area and giving targets to get companies to certain thresholds. “One of the big issues we see for start-up companies is when someone comes and offers them a cheque and they sell out,” she says, noting that the people in the start-up have taken the risks – but it is the company that comes along and buys them that makes the real profit. “It’s about having role models and increasing the number of companies who hang in there and don’t sell out too early,” she says. The availability of follow-on funding was one hindrance to growth oft-mentioned in the past, but this issue has dissipated. “More growth funds are now available than at any time in the past,” Sinnamon says. “I don’t think it’s as big an issue as it was”.

The very competitiveness of the Irish economy is also an issue. On the day we meet, traffic has snarled to a standstill in Dublin’s city centre on the back of new traffic management measures, while the ongoing housing crisis is beginning to bite foreign direct investment. Sinnamon concedes that both are an issue, with rents of particular concern to some clients when they look to bring in talent from overseas. “It’s linked to infrastructural development that didn’t happen for a while,” she says.

Competitiveness is on Sinnamon’s mind, and she’s also looking to the forthcoming Budget to improve the offering for entrepreneurs in Ireland. While the Government has made some moves to enhance the capital gains tax regime for entrepreneurs, Ireland is still “not as competitive with the UK in that space” she says. After all, driving entrepreneurship reaps many rewards for a country. With the pressure on Dublin to cope, Sinnamon notes that 65% of Enterprise Ireland client company jobs were created outside Dublin last year. “There are towns in Ireland that really need to grow, and local business will drive that turnaround,” she says.