Northern Ireland: The Border Question
Above: Bombardier in Belfast. In October 2017 Airbus took a majority stake in the Bombardier C-Series programme, safeguarding 1,000 jobs. Airbus paid nothing for the stake, suggesting the programme has serious challenges (Credit: Bombardier)
Brexit poses major questions for manufacturing, but nowhere is the challenge more severe than in Northern Ireland, the only part of the UK to share a land border with the EU. By Gerrard Cowan
For certain sectors of its economy, Brexit could have catastrophic consequences, said Stephen Kelly, chief executive of trade body Manufacturing Northern Ireland. A ‘hard border’ could bring significant costs and delays, in terms of the paperwork involved with exporting to and importing from the EU. Secondly, Brexit could pose recruitment challenges, notably in the foods sector, which relies on seasonal workers from other EU countries. Additionally, there is the question of market access: the North’s largest export market is the Republic of Ireland, so “if we put barriers up to that trade, that’s going to have a pretty profound a ect on businesses that trade across the border”, he says.
An ideal world
Despite the challenges, Brexit could hold opportunities for the region, Kelly said, allowing it to act as a kind of bridge between the EU and the UK. No matter how it turns out, businesses need clarity, he said, with a need to agree a transition phase post-2019 being critical.
Beyond this, the sector would benefit from the return of the local Assembly and Executive, which have been suspended amid political negotiations.
“Our politicians were very good at jumping on aeroplanes and flying across the world and helping persuade potential investors to come here,” he said.
Transportation: buses, planes and tariff disputes
The biggest manufacturing sector in terms of economic output is engineering, Kelly said. Transportation is a particularly crucial dimension. Wrights Group, based in Ballymena, makes London’s new Routemaster buses. The region is perhaps best known, however, for aerospace; the world’s first aircraft manufacturer, Short Brothers, was established in the early 20th century, and was acquired from the UK government by Canada’s Bombardier in 1989.
Bombardier became the focus of an international row in the autumn when the US announced plans for tariffs on the company’s new C Series jet. There are fears the dispute could have a direct impact on jobs in Northern Ireland, where wings for the C Series are manufactured. Bombardier employs around 4,000 people in Belfast, and is the major customer for dozens of small and medium sized enterprises (SMEs) throughout the region. However, hopes for the project’s future were boosted in October, when Airbus signed an agreement to acquire a 50.01% stake in the C Series programme. Speaking at the time of the Airbus announcement, Michael Ryan, president of Bombardier Aerostructures and Engineering Services, said the agreement would strengthen the C Series on the international market, and “the resulting momentum will be felt positively in our business and throughout the Northern Ireland and UK supply chain”.
Spreading its wings
One of ADS’ goals has been reducing the dependence of these companies on Bombardier, and getting more business outside Northern Ireland. In a 10-year strategy published in 2014, ‘Northern Ireland: Partnering for Growth’, ADS outlined a sales and marketing plan aimed at boosting the business that local companies get with companies like Airbus and Boeing.
There has been a high degree of success in this direction; Northern Irish SMEs now supply parts to other programmes around the world. A number of international aerospace and defence companies have invested in the region, too. Rockwell Collins, a US company specialising in avionics and information systems, in April 2017 acquired B/E Aerospace, another US company, which specialises in aircraft interiors and has facilities in the region. Orr said the major goal was attracting a ‘Tier 1’ integrator: a major component supplier to global manufacturers like Boeing or Airbus.
Food and Drink
While engineering is the region’s largest manufacturing sector by economic impact, the most important in terms of employment is the food industry. About 21,000 people work directly in the area, with another 78,000 employed in farming and support services, according to the Northern Irish Food and Drink Associa- tion (NIFDA).
The vast majority of sales are outside Northern Ireland, said Brian Irwin, vice chairman of NIFDA and chairman of Irwin’s Bakery. The industry saw sales of about £4.8 billion in 2016. Only about a quarter of this was sold locally, with over £2 billion going to Great Britain, £1.149 billion to the EU (mainly the Republic of Ireland), and £140 million to the rest of the world. Irwin’s own company sells about half of its bread products outside of Northern Ireland, he said.
Some of the challenges facing the food sector are common across the UK, labour supply being prominent among them; fruit growers have been particularly reliant on migrant EU workers. Some are already deciding not to come to Northern Ireland, he said, due to the uncertainty surrounding their place in the workforce and the fall in the value of the pound.
“Nobody in their right mind wants to affect that, as it would hurt a lot of producers in Ireland, north and south,” Irwin said. “But it would also hurt consumers in GB, who currently enjoy a lot of very good beef and cheese and other produce from Ireland.”
After Brexit, the UK will be able to set its own standards in these areas and could even begin to diverge from the EU. Under this scenario, the food sector will still be subject to stringent controls over production, regulating the conditions under which animals are raised and produce is processed.
The industry will also explore Brexit-related opportunities, Irwin said, such as increased exports to non-EU countries. There could also be the potential to restructure the sector if, for example, it becomes too onerous to send Northern Irish milk to a Southern Irish cheese factory; such facilities could instead be built in the North. In the meantime, the industry should look to “Brexit neutral” investments in, for example, new products, training staff, and research.
“Industry is used to uncertainty, but uncertainty at this level makes investment and forward planning very difficult,” Irwin concludes.