Thu 24th Jul 2014
Capturing a Bigger Slice of Global Trade
Aside from the fact that the local economy is a very small market, there are numerous other reasons for engaging in exports – many of which are now well documented. Export sales lead to increased turnover and company growth; exporting firms reduce risk through market diversification; firms that export are generally more innovative (as new markets require adaptations on product etc); and also of course international trade has a positive impact on the entire economy through job creation and increased revenue streams
Northern Ireland currently has a handful of ‘big players’ operating in international markets. For example in recent weeks Wrightbus, the Ballymena based bus manufacturer, won a £30 million contract to supply 415 double deck bus kits to SBS Transit in Singapore. Randox Laboratories, First Derivatives, Norbrook Laboratories and Linden Foods are all further examples of local companies showing that they can compete successfully in foreign markets.
But it isn’t just the ‘big players’ that can achieve through growth through export and at Danske Bank every day we are privy to success stories of local SMEs and micro-businesses which have expanded into new foreign markets. The vast majority of companies in Northern Ireland are micro businesses in terms of both turnover and employment and, for these firms, the prospect of exporting can be daunting. Export markets may seem ‘out of reach’ because of resource constraints, or difficulty in accessing information around areas such as market data, customs clearance, import regulations, taxes and export licenses.
The good news for these aspiring exporters is that, alongside export support programmes such as Danske Bank Export First in partnership with Northern Ireland Chamber of Commerce & Industry, increasingly local government agencies such as Invest NI and InterTradeIreland are providing varying degrees of support for local companies when it comes to selling abroad.
At the UK government level too it appears that exports are being targeted as a route to re-balancing the UK’s economic recovery. Support is growing for non-exporting companies to start engaging in non-domestic trade and the support is not limited just to the manufacturing sector. In recent weeks the UK Prime Minister David Cameron launched a strategy specifically tailored to raising exports in the creative sector. This new strategy aims to increase the value of creative industries exports in the UK to £31bn by 2020.
In Europe also policy-makers are keen to reduce barriers to international trade. The European Commission hopes to broker a deal to raise export levels between members of the European Union and the United States. The Transatlantic Trade and Investment Par¬tnership (TTIP) was first announced at the G8 Summit in Enniskillen and has now entered the sixth round of negotiations. A trade agreement between the EU and the US would open up substantial opportunities for local companies to break into the US market – an English speaking country with 311 million customers. With Danske Bank’s ‘Big Picture’ report predicting global growth of 3.6 per cent this year and 4.1 per cent in 2015 the challenge is now on for Northern Ireland to capture a bigger slice of global trade.
Angela McGowan, Chief Economist, Danske Bank. July 2014.