Brexit Readiness Checker helps firms examine their preparedness

Companies with any lingering doubts in relation to their state of preparedness for Brexit should avail of the free Enterprise Ireland Brexit Readiness Checker. The online form takes less than 15 minutes to complete and at the end of the process you get a personalised Brexit Readiness report which highlights any gaps in your preparations, identifies priority areas for attention, and gives details of where to find help and support.

The Brexit Readiness Checker comprises 25 very straightforward questions divided into the key areas of customs, finance, strategic sourcing, and serving your UK customer. It also covers other important aspects such as potential GDPR exposure and EU citizens’ rights.

The Customs section covers EORI registration, customs codes, country of origin, potential tariffs, the appointment of customs brokers or agents, movement of products of animal origin, customs and tariff payments, and administration issues.

The Finance & Currency Management section looks at the financial and operational impacts of Brexit. These include the impact of exchange rate changes on the bottom line, the cash flow implications of the new trading environment, the potential requirement for additional working capital, and VAT implications.

Strategic Sourcing addresses the percentage of supplies coming from or through the UK, reliance on UK suppliers, overall security of supply, and supply chain disruption mitigation measures.

Serving your UK Customer looks at strategic issues, such as giving your customers confidence that they will not face any disruption arising from your business, the potential to improve the reputation and value your business can bring to its UK customers, and the possibility of establishing an in-market presence in the UK.

The final section looks at issues such as the potential for GDPR breaches as a result of the export of data to the UK after 1 January 2021, the possible requirement of non-Irish EU nationals to travel to the UK in future, and whether such EU citizens employed in the UK have ‘settled status’ allowing them to continue to live and work there.

The simple act of completing the questionnaire will quickly highlight areas requiring attention, but the personalised report adds real value both in terms of its presentation and content.

The readiness state of your business in relation to each area and question is assessed and given a rating of red, amber or green. With red meaning that urgent action is recommended and green meaning the business is a step closer to being ready for the end of the transition period on 1 January 2021.

In each case where action is recommended the report identifies resources to assist and offers signposts to where they can be found. Taken as a whole, the report adds up to an implementation plan for companies to follow in the run-up to the UK’s (excl NI) final departure from the EU Customs Union and Single Market.

For example, where a company hasn’t identified who will manage the customs procedures and paperwork, the report provides a commentary to explain the importance of this and why urgent action is required:

“The movement of goods to, from and through the UK (Excl NI) will require the submission of customs declarations to customs authorities in advance of the goods departing from Ireland/the UK. There are also pre-boarding notification requirements for goods moving by ferry to or from the UK. This will pose difficulties for new importers and exporters as they seek to understand and implement customs processes for the first time. Companies have two options: (1) Seek out a customs intermediary or ask your logistics provider to do this work on your behalf. Businesses should budget for approximately €50 per declaration in this scenario; (2) Build the capability in-house. Training is key, along with the identification of a software system and the people required to make the declarations. Allow 3–4 months approximately for recruitment and training. When insourced, companies should budget between €7 and €8 per declaration, along with the associated salary and training costs. Each company should examine its own business case in detail before making any decisions.”

In addition, it points to sources of assistance:

Enterprise Ireland > Insights > Deciding to insource or outsource customs clearance

Enterprise Ireland > Customs Awareness Training

SkillNet Ireland > Building customs capability internally

Similarly, where a business hasn’t identified how much additional funding it will require to deal with the new trading environment, the report offers the following commentary and advice:

“When looking at the impact on cash flow when trading with an evolving UK, factors like extra customs charges, advance purchasing and funding to explore new markets come into consideration. The first step is to develop a robust forecasting model to understand how much additional funding, if any, is required to support a company’s action plan and when it might be needed. Along with internal measures to support cash flow, e.g. a deferred payment facility from Revenue or efficient credit controls, companies can also look at a range of external financing options. The Strategic Banking Corporation of Ireland (SBCI) has available a Brexit Loan Scheme and a Future Growth Loan Scheme to support working capital and longer-term strategic investment respectively. These funds are delivered through the main Irish banks and are worth considering if finance is required to fund business plans.”

By following each piece of advice and availing of the supports and resources identified in the report a business can, in a relatively short period of time, make significant progress towards being ready for Brexit on 1 January.

Click here for the Brexit Readiness Checker 

Ready for Customs grant – Emerald Freight Express

 

Securing Enterprise Ireland’s new Ready for Customs grant helped ensure Emerald Freight Express, one of Ireland’s leading freight forwarders, was fully prepared for the UK leaving the EU.

For Emerald Freight Express it’s likely to be a busy time, moving goods for client companies all around the globe, including into and out of the UK, says Anna Barden, Financial Director. Securing the grant from Enterprise Ireland helped bring the company to this position of strength.

“We’re a one-stop-shop for air, sea and road, import and export, including warehouse and 3PL or ‘third party logistics’”, she explains.

The company has a highly trained team of 28 and has been a certified Authorised Economic Operator (AEO) since 2011. As a trusted provider of freight forwarding services, it helps its clients to ship their goods ar ound the globe. Right now, however, all eyes are on the UK and what 1st of January will mean for goods being shipped to, from and through the UK.

Keeping focused

Not alone is Emerald Freight Express set to provide new customs services to new customers, it has expanded the customs services it offers existing ones too, she points out.

To ensure it could continue to provide a premium service to all customers, Emerald Freight Express had to invest heavily in personnel, office space, and IT systems.

“When the Brexit vote happened, we had a huge volume of enquiries from people panicking about what they were going to do,” says Anna Barden.

The team worked with each caller, helping them to determine the decisions they needed to make about things like who was going to handle customs clearances and the need to get an EORI (economic operators’ registration and identification) number or register for UK VAT.

“Unfortunately, this has been a very challenging year for all of them because of Covid, but it is important to stay focused and put the right processes in place. There is still a little window of time in which to do it but everybody needs to have their house in order before 31st December,” she explains.

The fact that trade negotiations between the UK and EU are still going on makes no difference, she points out. New customs procedures will still apply regardless of what happens in terms of tariffs and duty.

“From 1st January customs declarations and POOs, or Proof of Origins, will be required,” she points out. Importers and exporters will have to be fully compliant with the new requirements.

Securing a Ready for Customs grant from Enterprise Ireland helped Emerald Freight Express to make the internal changes it needed to make in order to be Brexit ready.

One of the first steps we took was to set up a new customs brokerage department, to handle client queries. It redeployed two key employees to manage this specialist division and hired four new recruits to staff it.

It then hired two new staff to fill the vacancies caused by the redeployment of managers, upgraded its IT systems and invested heavily in training, so that every single member of the team could develop the new skills required.

At the same time as Emerald Freight Express was making these investments, it had to expand its offices to cope with Covid-19 social distancing requirements.

Challenging year

All in all, it has been a hugely challenging year. “With recruitment costs, IT costs and training costs, we have had an enormous outlay in terms of getting ready for Brexit. But it was really important to ensure we continued to service our existing clients, and new ones, to the highest standards,” says Anna Barden.

“This was an investment we had to make. The Ready for Customs grant allowed us that cushion we needed to get it done.”

While there will be a steep learning curve for everyone in January, as well as, most likely, delays, the management team at Emerald Freight is already looking beyond the challenges to the new opportunities Brexit will give rise to.

For a start, clients for whom it previously looked after only Far East or US freight are now coming to it to handle their UK business as well.

“With every challenge comes opportunity,” says Anna Barden. “At the same time, you have to be able to stand over what you promise and be able to deliver on what you say. We now have the talent, the systems and the tools in place to do just that.”

She recommends other businesses looking to get ready for customs should check out Enterprise Ireland’s new Ready for Customs grant, which provides up to Euro 9000 for every new full-time staff member employed to handle customs or half that amount for a new part-timer.

“The application process for the grant was very straight forward and we got confirmation of approval within two weeks,” says Barden.

“We have the skills and the systems in place now to deal with anything that is going to happen on 1st January.”

 

Learn more about The Ready for Customs grant here

Building resilience into your supply base

Every Irish company needs a plan to deal with the impact on supply chains once the UK withdraws from the EU.This is the advice of Mike McGrath, managing director of specialist procurement consultancy ARVO.

 

“With the advent of Brexit the UK will become a third country in terms of trade with the EU,” he explains. There is a huge level of interdependence in the supply chains between the two countries, and with no Brexit deal done yet it is difficult for businesses to plan for what it will mean. It is not like Y2K, food and mouth disease or GDPR, where we had defined problems to deal with which meant businesses could prepare. Brexit is different.”

 

Understand your Brexit exposure

While some businesses will be less exposed than others to the impact of Brexit, he argues that every company still needs to understand it. “It is certainly the case that some sectors are more exposed, whereas IT and services are less so, as they do not have products crossing borders,” he notes.

 

Increased administration post Brexit

“There will be logistics issues, there will be customs declarations, there will be VAT and possibly duties, as well as a huge amount of bureaucracy to contend with,” he adds. “Businesses are busy at selling and generating profits but will have to make time for the increased administrative burden and the costs that will entail.”

 

Analysing your Brexit risk

McGrath warns against the concept of “Brexit fatigue”, the condition which first emerged as people became tired of the slow pace of Brexit negotiations. “Companies still need to make their own strategic arrangements and contingency plans. Every business should have a Brexit plan, whether that’s one page or 100. There is good support available from Enterprise Ireland for companies wishing to analyse their risk and regardless of the size of the business or the resources available, they should have a plan which prepares them for the worst while still hoping for the best.”

 

Planning for Brexit

McGrath advises businesses to go through everything, product by product, offering by offering and component by component to establish if there is a Brexit risk associated with any of them. “For example, UK suppliers won’t necessarily have a CE mark or REACH approval for chemicals anymore. You have to understand the risks and the cost implications for everything.”

Once the risk assessment has been complete, it is time to start contingency planning. “If there is to be an increase in costs, you have to ask if customers can take a price increase. Or can you reduce costs in other areas? Many Irish companies are currently going through this process.”

 

Supply chain

In some cases, it might be possible to secure alternative sources for products, but this may not always be possible. “The UK still has considerable strengths in particular industries, and it might not be possible to find an alternative supplier. Even if the supplies are coming from other EU countries, there could still be delays. The landbridge through Britain currently takes about 20 hours. After Brexit, that might be 40 hours and that could present problems for products with a short shelf life.”

The answer to many of these issues lies with the development of closer and better relationships with key suppliers. “We will still trade with the UK after Brexit, and if a product from the UK is unique, we will still need it. Building close relationships with suppliers and reaching formal agreements to secure future supplies is crucial.”

In cases where security of supply is an issue, there may be alternatives. “Companies need to look at their suppliers and see which are the most important and what the impact of Brexit might be on them if they can continue to supply. They might be able to find alternative suppliers elsewhere in the EU. If supplies are coming through a UK distributor, there is always the option for SMEs to come together to group buy directly from the source and bypass the Brexit risk.”

While companies may resent having to spend time on resources dealing with Brexit, McGrath contends that it is far from wasted. “Even if Brexit wasn’t happening, it is always good for a business to have the most resilient and efficient supply chain possible. Ash clouds, foot and mouth disease, Trump-inspired trade wars – these are all business risks that companies have to navigate their way through, and preparing for Brexit can only help with that.”

Mike Mc Grath has published an eBook Supplier Risks through Brexit. A copy is available here https://arvo.ie/go/ebook

 

Enterprise Ireland support

 

There are many supports available to Irish businesses, including Enterprise Ireland’s Act On Initiative which provides an independent consultant to analyse your business and develop a specific Brexit action plan.

Learn more about how Enterprise Ireland can support your business to strengthen its capabilities and best prepare for Brexit.

 

To learn more about building stability into your supplier relationships watch Mike’s webinar:  Building Resilience into your Supply Base.

How will Brexit impact the Irish life sciences sector?

With its global and highly regulated nature and highly complex supply chains, the Irish life sciences sector will face considerable challenges as a result of Brexit, regardless of the eventual outcome of the process.

The sector encompasses a vibrant pharmaceutical industry which is responsible for exports of almost €70 billion annually. In addition, it employs around 30,000 people directly and almost the same again indirectly. The medical devices sector employs a further 38,000 people and accounted for €12.6 billion in exports in 2016, making Ireland the second largest exporter of medtech products in Europe.

Irish-owned life sciences businesses include manufacturers, laboratory service providers, research operations, wholesalers and distributors, and Brexit presents a number of issues for them, most notably the creation of new customs barriers between the EU and the UK, and the impact of the UK’s departure from the EU regulatory system.

 

Know your supply chain

At a recent Brexit Stakeholder Event hosted by the Health Products Regulatory Authority (HPRA), more than 400 industry representatives were given a detailed briefing on the preparations being made to mitigate the impacts of Brexit and ensure continuity of supply of potentially life-saving medicines and medical devices to Irish patients.

Aoife Farrell, Health Products Distribution Manager with the HPRA, advised companies to ensure that they had detailed knowledge of their supply chains, and posed a number of questions. “I can’t stress enough the importance of mapping out your supply chain in detail – all the way from the raw materials needed to manufacture to the end product reaching the patient. Do you know where the active substance comes from; do you know how it gets here; does it transit the UK, or does it come from a UK manufacturing or storage facility; and what new regulatory and customs requirements do you need to be familiar with?”

 

Pharmaceuticals

From a regulatory point of view, when the UK becomes a third country products will have to be tested and certified at the point of import into the EU. The EU authorisation system for pharmaceutical products has a number of layers to it and these will have to be dealt with following Brexit. HPRA emphasised that it will work with stakeholders in managing their pathway to regulatory compliance in the event of a “no deal” Brexit.

The situation was eased somewhat as the UK Government announced that EU Community Marketing Authorisations will be converted to UK Marketing Authorisations following the UK’s departure from the EU.

 

Medical Devices

The role for HPRA for medical devices is quite different as they do not authorise medical devices. These products are certified by more than 50 notified bodies across the EU. However, it is estimated that up to 40 per cent of medical device products sold in Europe are certified by UK bodies.

Niall MacAleenan, Head of the Medical Devices Department, HPRA, explained that the European Commission announced some time ago that certificates issued by UK bodies will become invalid in the event of no deal being reached on withdrawal. This requires Irish manufacturers to explore alternative certification arranges and distributors and importers to engage with their suppliers to encourage them to secure alternative certification, or to find alternative products which are certified by notified bodies within the EU-27.

A number of UK notified bodies are already making arrangements to establish a presence in the EU, and this will alleviate the situation for many Irish companies. Irish manufacturers which currently have their products certified by UK bodies may also have to make alternative arrangements in order to continue to export to EU markets.

 

Dealing with Customs

Regardless of the final complexion of any future relationship, once the UK leaves the EU and its Customs Union it will become a third country, and customs will be a mandatory requirement for goods passing between Ireland and the UK. While there are no specific requirements applying to medicines and medical devices, Aoife Farrell had a warning in relation to mixed loads.

“If your goods are being transported in a mixed load that also contains goods like food, some of which require a mandatory customs check, there will be delays,” she warned. “If your products are subject to a short shelf life, or require particular storage conditions, it would be wise to attempt to avoid this situation.”

She added that there are special customs procedures in place for goods originating in one EU country and transiting through the UK before arriving in Ireland. “The HPRA will not regard these products as having been exported to a third country and re-imported from it.”

Carol-Ann O’Keeffe, Assistant Principal with Revenue Corporate Affairs and Customs noted that goods destined from the UK, coming in from the UK, or transiting through it will require customs declarations. “These declarations are submitted electronically and processed in milliseconds. We carry out a risk analysis and that guides us as to which consignments are checked. In general, the vast majority will be green routed with no check. At present, the reality is that 92 per cent of goods coming in from third countries are green routed.”

 

Key steps for exporters

And she had some advice for exporters. “If you are selling goods into the UK, you will need to supply certain key data in advance. These include the tariff codes for the products; the origin of the products; the consigner; the consignee; and the value. The UK is in the process of passing new legislation requiring customs formalities for imports to the UK to be completed before goods can even be loaded onto the ship. You will need to make sure that your customer has all the information needed in order to complete the formalities; otherwise, the shipment cannot go ahead.”

She advised companies with doubts in relation to customs arrangements post-Brexit to use the online customs training module available from Enterprise Ireland. “That’s a really valuable tool to access,” she added.

Addressing supply chain challenges in the UK Market

The UK leaving the EU could bring both opportunities and challenges to Irish-based supply chains says Garrett Cronin, Advisory Consulting Partner, PwC

 

Sourcing

While initial drops in the value of sterling created sudden opportunities for procuring goods and services from the UK, the longer term could see an overall reduction in this activity as organisations limit their exposure to any future tariffs on UK imports.

In addition, organisations in other EU countries may reassess their UK sourcing, ensuring supplies that could attract high tariffs (e.g. agricultural products) are avoided, potentially sourcing them from Ireland instead.

Services may also be affected, with UK-based service centres and supply-chain hubs becoming unviable (e.g. if all procurement is done in the UK for EU production). This could be an opportunity for firms to manage their end-to-end supply chain from Ireland using centralised hubs.

UK contracts referring to EU law, or the requirement for EU access, will require re-negotiation or amendment. Trade credit insurance should also be considered.

Local or dual-sourcing operations could increase, as organisations try to limit their exposure or try to take advantage of increased ‘going-local’ consumer sentiment.

 

Production

With so much global uncertainty, demand volatility is likely to be a major factor in the near future. While this will impact demand and supply planning at global levels, it could provide motivation for organisations to centralise this function in Ireland.

Organisations using production activities in the UK to supply the UK market may be sheltered from any direct impact. But where UK production exists for EU markets, there may be an incentive to relocate production (or at least the process of finishing goods) to an EU location.

Also, UK labour costs (eg operator costs) could increase as a result of inflation – due to sterling volatility and a reduction in available labour if immigration is reduced.

With 80% of Ireland’s product energy imported from the UK, production costs in Ireland could be adversely or favourably impacted, largely depending on the outcome of the political negotiations.

Product development, certification, quality control and intellectual property will also see changes and new legislation.

 

Logistics networks

Opportunities now exist for redesigning and consolidating supply-chain networks into Ireland. This would be more likely for those who transit goods destined for the EU through the UK or if warehouses based in the UK were eventually to see throughput movements being treated as imports and exports.

Distribution may see volume shifts in orders from the UK instead going to the EU, US or new markets, potentially impacting freight rates based on volume discounts for specific routes.

This may have a greater impact on Irish-owned companies than on foreign-owned companies based in Ireland, because foreign owned companies rely far less on the UK as an export destination.

Alternatively, online sales from the UK could increase due to fluctuating exchange rates, and, should any related global economic downturn occur, global freight rates could change based on the effect on overall capacity.

Lead times may need to be assessed as a result of longer processing times associated with export regulations and transportation to new, more geographically distant markets. This would be likely to have a larger impact on ad-hoc or time-sensitive orders.

Aftermarket, repair and reverse logistics operations may also become unviable in the UK for EU consumers and vice-versa for UK customers using centres in the EU.

 

Value chain and back office

The UK will likely see an increase in regulatory, legal and customs requirements, creating a need for local export control teams or for back-office outsourcing of this activity to specialists (at a cost).

Any new requirements could also increase supply-chain administration costs, with the respective systems (eg ERP) also potentially needing updating or upgrading to support this.

Working capital requirements may increase to support the need for immediate or postponed customs and duty payments, should they become applicable. While the actual costs on imports to Ireland or exports to the UK may not increase, any initial outlay of cash required could impact cash flow.

There is likely to be delayed decision making, impacting expansion, production opportunities, footprint/landscape changes, or M&A activity – which could affect investment in both the UK and Ireland.

The cost of business travel to and from the UK could increase should new charges or visa requirements be introduced.

 

What can organisations do?

•     Immediate actions: Focus on the initial consequences (e.g. changing sourcing approaches to benefit from exchange rates fluctuation)

•     Medium Term: Scenario plan, based on ‘what if’ or on statements coming from negotiations (e.g. consider initiating network reviews).

•     Longer term: Act on the basis of what emerges from negotiations (e.g. changing supply chain strategies or implementing network changes).

 

Learn more how Enterprise Ireland can support your supply chain challenges with the Brexit: Act On Initiative.