Download Appetite for Growth 22 September 2016

Brexit Survey
Appetite for Growth
22 September 2016
Northern Ireland Food and Drink
Industry
Estimated scale of the Industry
21,000 Full time equivalent
employees
Exports (exc. UK) £1.36 billion
in 2014
T
e and
NI Food
x
Drink Industry
t
Gross Turnover
£4.6 billion
Estimated 25% of NI’s
manufacturing sales in 2014
Source: DAERA Size and Performance of the NI Food and Drinks Processing Sector, Subsector Statistics 2014, with provisional estimates for 2015; July 2016
Summary of responses
Survey Coverage
Responses
from 39
Companies
Employees –
13,500
Source: Deloitte/NIFDA Brexit Survey (20 September 2016)
Turnover £3.6bn
Exports value £500m
Immediate impacts since the EU
Referendum
What is already affecting the industry
80%
70%
69%
60%
50%
40%
30%
20%
16%
12%
10%
3%
0%
Currency Volatility
•
Source: Deloitte/NIFDA Brexit Survey (20 September 2016)
Low Customer/Consumer
Confidence
Credit Availability
Loss of Employees due to
concerns regarding free
movement
Immediate impacts on Decision
Making
High impact areas where the EU Referendum is already influencing companies
All decision making has an additional level
of consideration given for effects of Brexit.
Survey Respondent
High Impact Responses
Supply Chain Planning
Cost Reduction Initiatives
Market Development Activities
Hiring Plans
Merger and Acquisition Plans
Level of Capital Expenditure
0%
•
5%
10%
15%
20%
25%
30%
Source: Deloitte/NIFDA Brexit Survey (20 September 2016)
5
Immediate impacts on Decision
Making
Low Impact Responses
Low impact areas where the EU Referendum is already influencing companies
Supply Chain Planning
Cost Reduction Initiatives
Market Development Activities
Hiring Plans
Merger and Acquisition Plans
Level of Capital Expenditure
0%
•
5%
10%
15%
20%
25%
Source: Deloitte/NIFDA Brexit Survey (20 September 2016)
6
Exposure to Non UK Labour
Dependency for flexible labour
•
Full Time Employees of
survey respondents
46%
Non Uk
•
•
Peak contract labour of
survey respondants
91%
UK
Non UK
UK
•
Full time employees of 3
companies most exposed to EU
labour
60%
Non uk
UK
Source: Deloitte/NIFDA Brexit Survey (20 September 2016)
7
Ability to find
suitable local
employees
0%
10%
20%
30%
All Respondants
Reasonably Easy
40%
60%
80%
14
7
1
12
16
Company history would suggest UK
citizens do not want to perform
processing roles for more than short
periods of time. Survey Respondent
3
“Agency and foreign permanent workers are very
important to us. All of the Agency workers are European
and the flexible nature of this part of the workforce is
valued . Skilful, willing to work weekends, anti social
shifts, turn up reliably. Mayhem without them. Survey
respondent
Source: Deloitte/NIFDA Brexit Survey (20 September 2016)
100%
14
5
Less than 100 Employees
90%
15
Non-NI Controlled
•
70%
21
NI Controlled
100+ Employees
50%
Difficult
Turnover Analysis
Current turnover by destination, and ability to switch to alternative markets
Sales by
destination
Ability to switch EU sales to
other markets
Easy
11%
ROI
16%
Rest of
EU
5%
Rest of
World
4%
UK
•
UK
75%
Rest of World
Source: Deloitte/NIFDA Brexit Survey (20 September 2016)
Rest of EU
Our products are hard to export to
other countries. If ROI was closed
the trade will not be replaced.
Only the very biggest companies
can open trade outside the EU.
Survey Respondent
Difficult
89%
ROI
Easy
Difficult
Input Analysis
Where companies are currently sourcing their inputs
Ability to switch to UK based
suppliers
Total: £1,574M
£1,600M
£1,400M
Impossibl
e
33%
Easy
31%
Inputs: Rest of World (exc. EU, UK and
RoI) = 57%
Easy
Difficult
£,1200M
Impossible
Difficult
36%
£1,000M
£800M
£684M
£600M
Inputs: EU (exc. RoI) = 31%
£400M
£200M
Inputs: Republic of Ireland = 12%
£0M
Impacts of tariffs on these
inputs
Source: Deloitte/NIFDA Brexit Survey (20 September 2016)
Survey findings on operational
adjustments required by Brexit
Key issues include IT systems and packaging changes
IT system
enhancements
required – Minimum
12 month lead time
Significant amount of packaging
has EU on it. This will become
redundant at a significant cost.
Survey Respondent
Requirements to
change packaging – 4
months at least
Adjustment for
operational
challenges
Constraints on haulage
availability if time at
ports/customs checks
are increased
Respondents locked
into 36 month
commercial contracts
Ensuring veterinary
access and
approvals are in
place for export
markets – openended time limit
Global threats and opportunities
from Brexit
Key messages from the survey
EU
Greatest threat and opportunity for
respondents across all sectors
Russia
Opportunity for grain
importation if tariffs
reduced
UK
Opportunity to
substitute EU imports
China
Number one
priority for 3
survey
companies
Brazil/Argentina
Threat to red meat
industry
Australlia/Ne
w Zealand
Threat to dairy
industry
Key messages received
Require free movement of goods and
people on the island, otherwise
Southern Irish market will be
supplied internally or from another
part of Europe due to relatively low
logistics costs.
Survey Respondent
Ability to continue to export NI
raw materials/ products for
processing in ROI
Survey Respondent
Marketing body
required
Retention of
soft border
with ROI
Retention of
support for
farmers
Areas of Focus
Technical
Access to
markets
Preservation of
Academic Base
Bakery products are hard to
export to other countries. If ROI
was closed the trade will not be
replaced. Only the very biggest
companies can open trade
outside the EU.
Survey Respondent
Regionalisation
13
Priority for NI Executive
Views of survey companies
76%
51%
43%
32%
27%
8%
Minimise border Ensure agricultural Continued free
Minimise
Minimise
Business Support
disruption with ROI subsidies continue movement of EU tariffs/VAT by EU tariffs/VAT by UK
Schemes
nationals
countries on UK countries on EU
imports
imports
Source: Deloitte/NIFDA Brexit Survey (20 September 2016)