Sourcing the right Eurozone market for your business

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Exporting to the Eurozone makes sense for Irish firms for several reasons. We share a common currency. Trade within the Eurozone benefits from the absence of tariffs and customs. A common regulatory environment means that Irish goods and services comply with EU legislation.

The Eurozone offers ease of access to 340 million people in the 19 states that share the single currency and a stable economy that, as a bloc, will continue to grow a further 1.3% through 2019.

Although the Eurozone’s population is five times that of the UK, it accounts for only 20% of all Irish exports. As such, it presents what Minister for Trade Pat Breen T.D. described as one of the greatest sources of “untapped export potential” at Enterprise Ireland’s Eurozone Summit earlier this year.

 

How to find the right Eurozone market for you

Finding the right market fit for your exports requires groundwork and an awareness that Europe is composed of different economies and markets, each with its own advantages and barriers to entry.

In order to successfully enter Eurozone markets, all elements of new market entry preparations are required: market research to select the market with the best opportunities, a value proposition that matches the new market and highlights your competitive advantage, the right route to market, and the resourcing of people, skills and funding to make it happen.

Some countries have well-known strengths and sectoral specialisms. At the Eurozone Summit, delegates heard from market experts who outlined some of the major opportunities – and some of the risks – that member state economies hold for Irish exporters.

 

Opportunities across the Eurozone

Germany is the largest Eurozone economy and the world’s fourth largest. Famed for its manufacturing sector, there are also opportunities for Irish exporters in the automotive, pharmaceuticals and medical device sectors. As one of the biggest foreign direct investors in the Irish medtech sector, German firms are familiar with Irish innovation and regard it highly.

Accessing Germany requires breaking into long-standing supply chains built on loyalty and quality, with consistency a key driver for German consumers. Decision making and order lead-in times can be protracted but the Irish reputation for flexibility stands exporters in good stead.

While many German brands are well known internationally, the domestic economy is driven by SMEs or ‘mittelstadts’, Angela Cullen, Senior Editor at Bloomberg Frankfurt, told the Eurozone Summit.

“Thousands of them form the backbone of the economy and they have honed their products to be market leaders. Partnering with a German sectoral partner may be necessary to get a market foothold.”

The nearby Benelux countries are some of the most densely populated areas of the Eurozone, allowing the rollout of a product to a large cross section within a small geographic area.

The Netherlands has long positioned itself as the number one logistics nation of the Eurozone with Rotterdam often referred to as ‘Germany’s largest port’.

As well as being the first point of entry for many physical goods, the Netherlands acts as a first point of entry for data as it is home to some of the largest data centres in Europe. Irish construction consultancy and build expertise is valued by the Dutch, with the sector continuing to show growth, and Dutch firms focused on securing their design and build supply chains post-Brexit.

“It is an extremely developed economy that is open to business and used to working with partners so it is natural for the Dutch to partner with fellow member states to bring off a project,” Willem Noë from the European Commission in Ireland said.

Belgium is often said to be one of the best test markets for products, given its population mix, and can be an ideal testbed, Ruben Hamilius, managing director of Businessgames Ireland, told the event.

“But be warned, the biggest mistake I see is exporters think ‘Build it once, sell it forever’ but that is not really the case. You need to do your research, as the product fit may not be right. Belgium is great for that.”

It certainly suited Irish parking marketplace start-up Parkpnp, who rolled out its parking app tech in Belgium first, eschewing its home market and the UK. The company has now honed its product into a franchising model already in place in the Netherlands and is rolling it out into France and Germany after learning valuable lessons in the testbed market.

In France, local language skills can be crucial, while supply chains are generally built on face-to-face contact rather than via the internet.

 

Enterprise Ireland supports can help

Enterprise Ireland’s world-class Market Research Centre has extensive resources to aid your research, while our Excel at Market Intelligence programme will advise how best to conduct market research.

Our Market Discovery fund is a key financial support for new market entry, ensuring you have funding to research, get expert advice and conduct market study visits. GradStart provides up to 70pc of two-year salaries for graduates with relevant market language skills.

Companies we support benefit from our market advisers’ near-unmatched knowledge of market dynamics, target buyers, networks and ecosystems across six Eurozone locations. When you’re ready to enter the market, we offer a key manager grant to help co-fund the salary of personnel with the right skills to work with market advisers and drive your diversification plans.

These supports will help ensure you find the right market fit and  “take advantage of the Eurozone”, as advised by the first President of the European Council, Count Herman Van Rompuy, at the Eurozone Summit.

 

 

Offshore wind energy

Significant opportunities for Irish companies in the UK offshore wind industry

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Ambitious plans by the UK government mean that the country’s offshore wind industry is one of the most exciting and vibrant energy sectors in Europe, translating into exciting opportunities for Irish companies.

The UK offshore wind sector received a boost in March 2019. Under the government’s offshore wind sector deal, the country plans to generate 30 Gigawatts (GW) of offshore wind power by 2030 (approximately one third of the UK’s electricity needs), up from a current operational capacity of 7GW.

This ambitious plan requires a significant infrastructural investment of over £40 billion (€46 billion) and will require substantial collaboration with international supply chain partners. What’s more, the UK government has made a strong commitment to the investment, regardless of the outcome of Brexit. Given Ireland’s strong marine heritage and aptitude for innovation, the deal creates significant opportunities for Irish companies to collaborate with the UK offshore wind industry.

To promote Irish capability in the space, Enterprise Ireland has established an Offshore Wind Cluster, currently consisting of 30 companies. The cluster will promote communication and collaboration between cluster members and act as a primary vehicle for interaction with UK industry stakeholders and key buyers. The cluster will also provide members with the market insights required to maximise the potential for success.

 

Building on offshore wind success

The levelized cost of energy (LCOE) of offshore wind in the UK has dropped at pace over the last 10 years or so, and is now regarded as the cheapest form of clean large-scale new-generation energy relative to nuclear and gas.

This new deal looks set to build on that success, with several important aims for the UK economy. These include creating 27,000 skilled jobs, decreasing the cost of electricity to UK consumers by £2.4 billion (€2.8 billion), and transforming rural coastal communities into thriving hubs of economic activity and technological innovation. Part of the plan focuses on developing a new accreditation framework for apprentices and workers, which will equip the latter in particular with transferable and exportable skills.

As part of the deal, the UK government has committed to holding biannual Contracts for Difference (CfD) rounds, with 14GW confirmed capacity likely to be supplemented by four to five further CfD rounds releasing a further 16GW. Approximately 3-4GW is likely to be released each round, with 1.5-2GW build out per annum. To put this into an Irish perspective, Ireland’s largest single power station is Moneypoint, which has a 900MW capacity – almost 25% of total Irish generating capacity. This means the UK is aiming to have an annual build out of the equivalent of two Moneypoint power stations.

These are ambitious aims for the industry, and although one objective of the UK government is to create local, regionally dispersed employment (the deal aims for 60% local content), the offshore wind industry is a global one, and the UK must compete in the global marketplace.

Offshore wind is now also a key part of energy strategies in Germany, Belgium, Denmark and France, and deployment in Europe is likely to exceed 67GW by 2030 – a huge jump from the 16GW recorded in 2017. Each country is now looking for innovative solutions to key challenges and to drive down costs, creating substantial global opportunities for companies working across the sector.

 

Key challenges

The industry’s expansion has created challenges, and opportunities for the Irish supply chain lie in the provision of cost-effective and innovative solutions. With floating offshore wind also a rapidly developing technology, deeper waters and more difficult environmental conditions create additional and more unique innovation challenges.

Ireland has strong capabilities in several areas important in helping to meet these challenges, including survey provision and geotechnical services, maintenance and data collection. Innovation is integral in all of these areas, and with our strong IT, Internet of Things (IoT) and marine industries, Irish companies are increasingly at the cutting edge when it comes to bringing effective solutions to market.

The UK offshore wind industry is also increasingly aware of the strengths of Irish companies and innovators, as evidenced by the number of major offshore wind developers and top-level contracting companies who travelled to Dublin to attend the Enterprise Ireland Offshore Wind Forum in late March 2019.

Among the visiting companies to present were SSE, who has over 15 years’ experience in offshore wind, counting such projects as Beatrice, Seagreen, Dogger Bank and Greater Gabbard Walney among their development portfolio. SSE is also currently developing the Seagreen Zone; Phase One within the Zone includes the development of two offshore wind farms, Seagreen Alpha and Seagreen Bravo, located around 27km from the Angus coastline in Scotland, which have a potential combined capacity of up to 1.5GW. The company is aiming to start construction in 2021, with first exports in 2023. Phase Two and Phase Three will follow, with billions of pounds invested in each one.

Also presenting at the event was EDF Renewables. The organisation’s Head of UK Development, Sarah Pirie, spoke about the Neart na Gaoithe project, a £3 billion (€3.5 billion) capital project over its lifetime. Another major developer to present was EDP Renewables. The company highlighted opportunities in the Moray East and Moray West projects, both of which are looking for supply chain partners.

With UK developers and their top tier contracting partners eager to engage with the Irish offshore wind supply chain, it is clear that increased interaction and dialogue is key to collaboration between the industries in both countries.

For further information on Irish capability in the space, and to learn more about future Enterprise Ireland offshore wind cluster plans, please contact Darragh Cotter in Enterprise Ireland’s London office at: darragh.cotter@enterprise-ireland.com.

Map of EU with padlock

GDPR and Data transfer to or through the UK

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The General Data Protection Regulation (GDPR) came into force on 25 May 2018 and unifies data protection law throughout the EU. It gives individuals control over their personal data and requires businesses and other organisations to put in place processes that protect and safeguard that data. The regulation also addresses the transfer of personal data outside the EU and EEA.

 

Dealing with the UK, USA and other third countries

GDPR came into sharp focus this year as a result of the UK’s withdrawal from the EU. GDPR still applies in the UK, however as it is now a third country it is subject to the GDPR rules governing the transfer of data outside the EU and EEA.

 

Data transfer to/through the UK

The first thing for firms to do is to establish exactly where their data goes. Companies may not realise that their cloud storage provider is actually located in Britain or Northern Ireland. Their pension schemes, payroll, healthcare plans may all be run out of the UK and involve the regular transfer of personal data. Workplace benefits databases could also be held in Britain or Northern Ireland. Even translation services might be covered if personal data is included in the material to be translated.

Having established that data is being transferred to the UK, the next step is to decide if that needs to continue. There may be options to look for another service provider in Ireland or another EU Member State and these should be explored.

Standard Contractual Clauses

If it is not possible or if it is too difficult to take this option, there is a ready solution to hand. There is a tool that can be used to solve this problem and it is available on the Data Protection Commission website. It is known as the standard contractual clauses (SCCs). This is a set of off-the-shelf clauses developed by the European Commission and which are recognised as an appropriate safeguard to ensure that firms remain compliant with GDPR.

The SCCs are already written and only require firms to fill in the blanks with their details. They can be appended to existing contracts and come into force when both parties sign them. Once signed, this enables firms to continue transferring data to the UK in full compliance with GDPR, and people still have their rights.

The data subject is also given certain specific rights under the SCCs even though they are not party to the relevant contract. Firms are also advised to update their privacy statements to indicate that the data is transferring to the UK under the terms of the SCCs.

The SCCs will cover most situations, but there are certain more complex cases where they may not apply. These are relatively rare, but firms in doubt should consult the Data Protection Commission or seek their own legal advice  to check out their particular situation.

There are also certain situations where the data transfer is not covered by contract. These include cases where data is being transferred from a UK Controller to an Irish processor for processing and then transferred back to the Controller. This has been a relatively routine process up until now, as the data remained within the EU at all times. The best advice for firms based in Ireland who find themselves in this situation is to look at the clauses within the SCCs and insert them into the service level agreement governing the activity. This will demonstrate an intention to be GDPR compliant in the new situation.

The same will apply to Irish shared services centres carrying out global back and middle office functions for multinational parents. They should update the terms of service to UK-based affiliates to include the SCCs.

 

Data Protection Policies

Some very large organisations use what are known as Binding Corporate Rules (BCRs). These are legally binding internal codes of conduct operating within a multinational group, which applies to transfers of personal data from the group’s EEA entities to the group’s non-EEA entities. The approval of BCRs can take a significant period of time and also, given the cost and complexity of BCRs, they are not a suitable transfer tool for most Irish companies.

The only remaining questions for Irish firms transferring data to the UK concern adequacy. Certain ‘third countries’, such as Japan, have received what is known as an ‘adequacy decision’ from the European Commission. This allows a cross-border personal data transfer from the EU to that country because it has been determined to have an adequate level of data protection safeguards compared to the EU. It could take some time before the European Commission completes its negotiations with the UK Government in order to deem the UK adequate as a jurisdiction to which data can be transferred under GDPR. Therefore, companies need to explore the options available to them when transferring data to the UK.

Irish companies banking United States

How to manage US banking, employees and legal fees

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Two challenges that Irish companies sometimes experience when preparing to export to the United States for the first time involve banking and employment. The following pointers will help you to prepare.

Download the full Going Global USA: Learn your Legals guide now.

All US banks require an Employer Identification Number (EIN) confirmation letter, also known as Form SS4, before opening a business account in your company’s name.

 

How to apply for an Employer Identification Number

You can apply for an EIN online on the Internal Revenue Services website, if you already have a US social security number (SSN), or an individual taxpayer identification number (ITIN).

If you don’t have an SSN, you can apply for an EIN from the IRS by fax or have a lawyer act as a ‘third-party designee’ to prepare and process an EIN application on your behalf.

 

If you have an EIN

Some banks will accept a copy of a fax from the IRS assigning your business entity with an EIN. Others will need to see the EIN verification letter sent by the IRS, which can take weeks to arrive.

Most banks will also require a copy of the company’s formation documents – US business address and annual statement of officers and directors.

To comply with mandatory anti-money laundering legislation, US banks need to verify the identity of those opening business accounts under Know Your Customer (KYC) rules. There are several ways the requirement can be met:

  • Get a visitor visa to travel to the US and personally open an account at your bank of choice
  • Use third-party services to help you set up an account
  • Some banks will set up an account without the relevant corporate officer being in the United States. If acting on a referral from a legal representative, the process can be completed via email.

 

Employment considerations

Irish companies should carefully plan their approach to hiring personnel in the US as there are a number of potential pitfalls to be aware of. For example, if you hire someone as a consultant or independent contractor, it could later be determined that they are actually an employee under US law. Improper classification risks exposing a company to penalties and liabilities, including the withholding of taxes, benefits, and the possibility of being sued by the employee.

Laws governing US employment and benefits are complicated, which makes it vital for potential exporters to seek the advice of legal professionals.

As US benefits packages vary widely and differ significantly from those in Ireland, companies should seek advice on what employees in specific roles are likely to expect when considering a job offer.

 

Legal costs

For small companies using a lawyer or legal service provider for help with company formation and setting up, fixed fee packages in the range US$3,000 to US$5,000 are available. Packages usually include general counsel, registration fees, and the creation of incorporation, confidentiality agreements and stock issuance.

In general, you can expect to pay additional fees for operating and shareholder agreements, as they can be highly complex. While legal assistance with IP transfers can also be costly due to complexity, many Irish companies keep IP rights within the Irish parent, with the US entity established as a servicing company.

 

Access more insights on doing business in the US.

Trevor Bishop UK Water

Senior water industry executive Trevor Bishop outlines opportunities as UK enters five-year plan

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Following a keynote speech at the Enterprise Ireland and Wet Networks (an Arup and WRC initiative) Water Innovation Seminar in February, Trevor Bishop spoke to Enterprise Ireland to discuss key issues explored at the event. Bishop is Organisational Development Director with Water Resources South East in the UK.

 

Water companies in England and Wales face demanding requirements for Asset Management Planning Period 7 (AMP7), with the next five-year plan for the sector covering the period 2020-2025. The economic water regulator Ofwat has said that issues to be addressed include population growth, climate change and water scarcity. Companies must also deliver on a need for fairer pricing, water supply resilience, and environmental protection.

 

Bishop stresses that requirements present a major opportunity for innovators to connect with water companies. One of the biggest problems faced is leakage, with many companies committing to reducing leaks by around 15% during AMP7. Bishop said, “It’s a very significant challenge. The boards [of water companies] have shown high levels of ambition following challenges set down by regulators. However, these ambitions will require companies to go beyond what they know they can do and will rely on real innovation to deliver.”

“It isn’t always easy for an SME to work directly with a big water company. We need to make sure we can find the right partnerships, so that innovation can be used where it’s appropriate and we can share and learn better between us”.

 

Bishop outlines what lies beneath

Much of a water company’s asset base is below ground, the network of pipes. A significant challenge is that knowledge about these assets is often limited: “It’s very difficult to understand their condition. We all too often tend to only know that there is a problem when something starts to go wrong,” Bishop explained.

One area in which innovators can assist water companies include the need for technology to monitor performance, condition, bursts and damage: “We’re starting to see some breakthrough technologies that could actually be quite disruptive, with regard to these aspects, particularly the shift from performance to condition monitoring.”

Bishop mentioned the potential to adapt ideas from other sectors. As we know, modern cars now use an electric current that flows through the windscreen, allowing it to detect water drops, so that wipers activate when it starts to rain. We are starting to see people thinking about similar application in the pipe network to alert companies to condition and leaks.

As its name suggests, Water Resources South East is an alliance between six water companies from the south east of England. It faces some major challenges arising with AMP7 and will need to increase capacity by roughly one third through to 2050 while needing to reduce its traditional reliance on mainly rivers and groundwater.

Bishop commented, “Most catchments are effectively fully licensed in terms of abstraction, so we need to look for innovations, new and different ways to use water more effectively by conservation, demand management and leakage, but also by moving water from areas of service to areas of deficit, looking at desalination, looking at more reservoirs, looking at effluent reuse and recycling of water within basins, etc.”

 

AMPing up the pressure

Irish innovators should be alert to the opportunities arising from challenges created by AMP7. Bishop noted that, “Ofwat is going to be putting some pretty serious efficiency challenges on base operation expenditure for water companies and that’s going to drive a strong need for really good innovations. A lot of companies were very interested in what they were seeing and hearing from some of the innovators [at the Water Innovation Seminar]”.

He added that he was not just impressed by the Irish companies alone: “I was really impressed with the system in Ireland to nurture those innovations and to help drive them through to commercial organisations.”

 

Adaptive planning

Trevor believes that resilience is about thinking about things in combination: “You can’t plan for every single extreme that might happen but what you can do is take a much broader overview of what those risks look like and what best value interventions you can make to actually help mitigate a range of threats.”

One issue of concern for Bishop is the ability to source appropriately skilled people, as multiple large infrastructural projects are underway in the UK: “Some companies are starting their own skills academies. We’ve got an organisation called Energy Utility Skills, which includes water, looking at future trends in skills and capacity”.

Water companies have traditionally been seen as risk averse. Is now the time for a change in attitude? Bishop concluded, “If you’re thinking about drinking water quality, absolutely not. They need to be risk averse. The legislation is set that way and so they should be. With regard to some of the other challenges we face, you’re looking at genuine opportunities for innovation. You’re looking at taking risks, and companies are starting to show they can do that by making their commitment on leakage above what they probably know how to deliver.”

 

Insights from the UK water sector

Steve Quarmby, United Utilities:

“United Utilities, in common with all water companies, has got to save something in the order of 8-10% of our capital spend. And that is expected to be delivered by innovative ways of working – the pathway to do that isn’t quite clear. The areas where we need to explore are defined but the means and the mechanisms are actually quite vague. Now, that’s quite inspiring and gives room for creativity but it’s also slightly scary because we don’t know what the answer is. However, I am optimistic because we do have a proven track record of having risen to all the previous challenges.”

 

Jon Brigg, Yorkshire Water:

“We’ve got a real challenge with phosphorus removal in the next five years under the Water Industry National Environment Programme (WINEP) challenge for 2020-2025. OxyMem technology [an Irish company who presented at the Water Innovation Seminar] doesn’t recover phosphorus but what it does is it creates capacity within a standing activator solution plan, which allows us to adapt half of the channel to phosphorus removal and a more concise footprint for nitrogen removal, the ammonia removal. It’s thinking about things slightly differently and with the NVP technology [another Irish company that presented at the seminar], again we’re looking differently at how we deal with small sewerage treatment works, and remote sewerage treatment works.”

 

Darragh Cotter, Cleantech Market Advisor based in Enterprise Ireland’s London office, commented, “It’s so important to have key UK water industry figures such as Trevor, Steve and Jon to Ireland to discuss the innovation challenges facing the sector.

“It gives Enterprise Ireland water and wastewater cluster members a clearer picture of the challenges and requirements facing UK water utilities. It’s also an important opportunity for Irish companies to showcase how they can collaborate with UK industry to help meet the stringent objectives set by Ofwat, the regulator. Exchanges like this are crucial for utility and supply chain engagement and are necessary to ensure that excellent Irish technology and innovation is at the forefront of sustainable water provision and management in the UK.”

Czech Republic

Central Europe: Old town, new export opportunities

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Ladislav Müller, manager for central and southeast Europe at Enterprise Ireland, describes new opportunities that are proving attractive to Irish exporters.

From Dublin, it only takes two hours on a packed plane to land in Prague. The city is a popular tourist destination and capital of the Czech Republic, one of the fastest growing economies in Central Europe. As thousands of tourists rushed to the cobbled streets of its old town, Czech Gross Domestic Product increased by 4.5% in the first quarter of 2018. Neighbouring Slovakia has shown 3.6% growth, with Hungary at 4.7%, and Romania at 4.2%.

According to EY’S Attractiveness Survey 2017, Central Europe attracted nearly half of Europe’s industrial investment projects in the period. Its strengths are its geographical links, good infrastructure, the quality of its human capital, and its productivity. The provision of EU funds is another key driver, particularly for Romania, Hungary, and the Czech Republic. The Financial Times projected an improved economic picture for the region, based on stronger-than-expected global demand, tighter labour markets, government stimulus measures, and easy financing conditions.

Irish exports to the region have also grown for the last ten years, even during the recession.

 

Irish exporting success in Central Europe

Many Irish exporters are growing sales by supplying large multinational corporations with a base in the region. Ventac, vehicle and industrial noise control specialists from county Wicklow, set up a regional sales office in the Czech Republic, while Waterford’s PPI Adhesive Products, a leading manufacturer of technical adhesive tapes, run their regional sales operations from Slovakia. Portwest, the Mayo-based designer and manufacturer of high-quality workwear, have a CEE sales headquarters in Hungary.

But Irish companies are not only targeting large multinational companies. Central European agriculture has experienced remarkable growth over the past number of years, supported by an expanding food industry, domestic investments, and EU farm subsidies. Between 2014 and 2020, CAP and EARDF subsidies will reach €26 billion in Romania, €8.3 billion in Hungary, and €7 billion in the Czech Republic. Spending is driven by pressures on efficiency and food safety, environmental and animal welfare regulations, and requirements for farm machinery upgrade or replacement.

In 2017 MooCall, producers of unique calving sensors, were awarded a Gold Medal for innovation at AnimalTech trade fair in the Czech Republic, followed by Dairymaster, who won the Grand Prix at Czech TechAgro 2018 for smart technology for their MooMonitor health and fertility monitoring system.

Enterprise Ireland runs a long-term programme called Opportunities in Agriculture in Central and Eastern Europe that helps Irish farming machinery and technology producers to enter local markets.

Many Irish companies perceive Central Europe as a source of competitive advantage on the continent. Kingspan, producer of insulation panels, celebrated twenty years for its plant in Hradec Kralove, Czech Republic in May 2018. PM Group, international providers of services in engineering, architecture, project management and construction management opened offices in the Czech Republic and Slovakia in 2010. Grafton Recruitment and CPL Jobs are market leaders in human resources management across the region, while many Irish technology companies set up in Romania to service customers.

 

A hub for business process outsourcing

Central Europe is also one of the fastest growing locations for business process outsourcing (BPO) centres and service companies in Europe. According to Outsourcing Advisors, a third of major outsourcing companies now come from Central and Eastern Europe. Ireland has a very strong offer for BPO operators, who are in turn always seeking solutions that drive efficiencies or offer cost savings.

 

Untapped opportunities in Central Europe

As Brexit uncertainties continue, Central Europe offers significant export market potential, thanks to its closeness to Ireland, strong Irish presence, and concentration of multinationals and local buyers.

To support further growth, Minister of State Pat Breen led an Enterprise Ireland trade mission to Warsaw and Prague last June, targeting opportunities across the engineering, electronics, enterprise software, and medical devices sectors. Irish companies signed contracts in excess of €7.5 million during the mission.

Enterprise Ireland’s office in the Czech Republic is ready to facilitate market research visits, introductions to buyers, and searches for distributors, to help companies we support to win new opportunities in an exciting region.

Learn more on how Enterprise Ireland supports businesses to diversify at Markets & Opportunities.

This article was originally published in the Sunday Independent.

Ambition Benelux: How we got up and running

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There’s an interesting Dutch saying for doing business that describes the appetite in the Netherlands for making something out of nothing: “Let’s make land together”.

It’s what the Dutch excel at and applies equally to trade and business. Where there is a market opportunity, chances are a firm from the Netherlands and Benelux region will be on it from the outset.

It should come as no surprise. The Benelux economies are some of the most open and easily accessible in the Eurozone, and also among the most lucrative.

 

Benelux as a gateway to the Eurozone

The Netherlands, Belgium and Luxembourg often present themselves as the gateway to Europe, in both a physical sense in shipping and logistics, as well as in areas such as data and financial services. And they have good reason to, with 200 million consumers living within just 500 miles of Benelux cities.

With a very compact and centralised population of their own serviced with excellent infrastructure, the opportunity has not gone unnoticed by Irish companies keen to diversify and take operations into the Eurozone.

At Enterprise Ireland’s Ambition Benelux event, companies that have entered the region explained why – and how – they chose to launch to secure the growth their companies required.

Gone are the days when a company could simply open a virtual office. Now companies must decide whether a branch office of their Irish company is best to get boots on the ground, or whether they need to set up a company in the usual manner in the export country. Either way, Irish companies have prospered by making their foray through a distribution agent or local partner, which provide useful market introductions and a real face-to-face contact point for clients and customers.

 

Parkpnp’s journey into Benelux

In some cases, the move is strategic from the get-go. In just 14 months, Parkpnp, a marketplace for renting unused car parking spaces, has expanded from Ireland into both Belgium and Netherlands with ambitions to enter a further eight European markets in the next two years.

For Jason Popplewell, Parkpnp COO, it became clear that branching from the Irish market to the UK or US would see his fledgling firm bump into larger and more established competitors in the sharing economy, so Europe was a logical choice.

“About six months ago, we acquired a company in Belgium called Sharemypark but they were just doing residential car parking spaces. It was a great match for us to bolt onto our system and it’s going very well.”

With a presence in Belgium, the company then moved into franchising their model.

“We sold our franchise into the Netherlands, and that launched around four months ago, and that’s going very well.

“Ultimately nothing beats feet on the ground.”

 

Booming sectors in Benelux

The boom in data centre construction in the Netherlands in particular, and the wider cleanbuild, pharma and life sciences sector has seen Irish design and construction expertise in demand. The trend has seen firms like Dublin-based RKD Architects move into Belgium and in a client-led sector, having a local presence has been vital for winning and expanding their order book.

Director, Geert Douterlungne said: “At the end of the day, it’s just an extra 10 minutes in the plane from Dublin. Clients want to meet, and given the location, you can be there to resolve any issue quickly.”

But entering a new market may force a company to learn some hard lessons, said Jim Costello, founder of Forest Produce, a horticultural giftware company. Entering the floral and horticulture market in one of the most competitive markets of its kind in Europe saw Costello quickly realise that competing on price points would not be an option.

 Getting a foothold in the market required Forest Produce to bring a USP to the table.

“The Dutch are very competitive and will outsource to a cheaper alternative very quickly. But what we have found though is that Dutch customers appreciate innovation. If you have something novel that they like they will pay good money for it,” said Costello

“You have to have something cutting edge. If you have something that is unique, be it a service or solving a problem, that is what we have found is the way to get and keep your company relevant in the Dutch marketplace.”

Darren Fortune, managing director of Wicklow-based Ventac, a specialist acoustic solutions company in the automotive industry said they opened their first overseas office in 2011 near Eindhoven.

“The UK was our biggest market but we knew that the bigger volume was Europe itself, so we wanted to break out.

“We went to Enterprise Ireland and did a lot of market research. We felt that the Netherlands was a great start, as it was easy access and the language barrier was negligible. Enterprise Ireland introduced us to people in our sector and, because the Netherlands is big into sector clusters, we were able to get into the automotive sector very quickly.

“The legal stuff scared me a little bit but it was much easier than we anticipated. We rented an office for €8,000 a year in a business centre with around 30 other firms and we were up and running.”

It’s a much-trotted out axiom in the age of the multinational: think global, act local. But with Benelux, it is possible. Fortune added: “It’s an hour away and they want to do business. What more could you want?”

 

Learn how Enterprise Ireland’s Market Research Centre can help you assess new market opportunities with bespoke business intelligence.

winning contracts US

Negotiating the non-negotiables: Tips for winning contracts in the US

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In a David and Goliath business encounter, David stands a better chance of success if it is obvious that he is good at what he does, said Sally Hughes, CEO of the International Association for Contract & Commercial Management (IACCM), speaking at this year’s E3 Entrepreneurship Export Exchange conference, organised by Enterprise Ireland and Global Situation Room.

 

IACCM is a not-for-profit organisation dedicated to raising the value and integrity of trading relationships worldwide, working side-by-side with both buyers and suppliers and with both mega-corporations and SMEs.

In her presentation, Hughes covered three lists:

  • the most common terms included in standard US contracts
  • the most important terms included in US contracts
  • strategies that SMEs need to adopt when dealing with major corporations.

She also described an example of an unnamed SME owner who negotiated a life-changing deal with retail giant Walmart and discussed how Irish firms could follow their example.

 

Show you’re an expert in your field

“In an environment where one side has significant buying power, as a supplier you have to demonstrate great quality and value,” she says. “More importantly, you need to present yourself as an expert in your field.

“The one area where there will inevitably be negotiation is price but it’s critical not to get dragged down in those discussions early on. In fact, in the first few meetings you don’t want to be negotiating price at all. The key to meaningful negotiation, and to the effective management of risk, is to get to know the buyer well.”

In Hughes’s Walmart example, the successful SME supplier spent 18 months getting to understand the retail giant’s needs. Notably, when the supplier was offered a contract with Walmart’s non-negotiable conditions, his lawyer warned him that the terms were ‘too risky’ and could cause the collapse of his business but the supplier continued to negotiate a deal.

 

Negotiating contracts in the US

According to Hughes, the terms most commonly negotiated in standard contracts in the US include:

  • Limitations of liability
  • Indemnification
  • Price, charges and price changes
  • Termination of contract
  • Scope and specification
  • Warranty
  • Performance guarantees and undertakings
  • Payment terms
  • Data protection, security and cyber-security
  • Liquidated damages.

Indeed, the IACCM chief said that, very often in contract negotiations, the areas that partners battle over the most are not always the most important. Hughes advised that the most important contract terms to focus on are those that will contribute most to your success, largely:

  • Scope and goals
  • Responsibilities
  • Prices, charges and price changes
  • Service levels
  • Performance, guarantees, undertakings
  • Limitation of liability
  • Payment terms
  • Warranty
  • Product specification

In the Walmart case, the SME owner believed he had to be better than the competition at accepting and managing risk. As part of his deal with the retailer, he requested access to sales data so that he could assume responsibility for ensuring that his products moved off the shelf.

“Success depends on the quality of the information flow from buyer to seller,” said Hughes. “Transparency is key and is in both parties’ best interest. This is about a partnership, no matter what your relative side.”

 

Winning business in the US

If you want to win business from bigger customers than you have ever had before in the United States, Hughes advised following these strategies:

  • Be better than your competition at accepting and managing risk
  • Demonstrate your expertise and educate your buyer – before discussing price
  • Get the buyer emotionally involved in your product or service
  • Demand quality information flows between you and your customer
  • You might not be able to negotiate ‘boilerplate’ – the standard terms and conditions listed at the end of most contracts – but you can ensure you implement good governance through communication protocols and problem-solving techniques
  • Even if it seems like a David and Goliath scenario, it is about a partnership. Big buying power doesn’t have to mean big negotiation power – that is down to you.

“Selling in the US market takes planning and it takes persistence,” added Hughes. “You need to understand who you are selling to, what rules and procedures they’ll be following, how will they measure value and what weightings they’ll apply to selection criteria.

“You’ll also need to have developed a negotiation strategy, how you will convince them that you are a reliable supplier committed to the market, that you are an expert in your field, that you are passionate about your product or service and that you understand fully the nature of your competition. You need to educate your buyer.”

 

Read more on doing business in the US market.

Why Portwest views the Eurozone as its local market

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Once a small family business in Mayo, Portwest has become the world’s fastest growing work wear company. Here’s how.

The saying, ‘don’t let perfect be the enemy of good’ means that if you wait for everything to be perfect, you’ll never progress. For businesses, the maxim could well be adapted to ‘don’t let success in the home market be the enemy of export growth’.

It was an issue touched on by Harry Hughes, CEO of Mayo-based safety clothing and equipment company Portwest. He was speaking at Competing for the Future, a breakfast briefing panel discussion organised by Enterprise Ireland as part of International Markets Week.

During the discussion, Hughes suggested to a packed auditorium in the RDS that success in the home market can inadvertently stymie ambition overseas.

“When you go abroad to foreign markets, you are starting at ground zero, which is not an easy place to be,” said Hughes.

It takes a successful business out of its comfort zone. “It just takes time and you have to stay with it,” he said.

Hughes, who is the current EY Entrepreneur of the Year, helped grow what was a small family business with a turnover of €100,000 in 1978 into the €205 million a year business employing 3000 staff it is today.

 

How Portwest broke Europe

The UK was Portwest’s first export market and remains an important one for the company today, accounting for 40% of its business. Its success there may, however, have discouraged it from entering new markets.

“We were probably slow learners in the beginning, in that we were 25 years selling in Britain and had reached maturity in that market before, 15 years ago, we started looking into Europe,” said Hughes.

It has taken a “one step at a time” approach to new markets ever since, starting with the Netherlands and then France. Today, Portwest sells into 120 countries worldwide.

“We started in the Dutch market and after that it was one brick at a time in Europe. We now have sales people in every country in Europe. We have eight people in Germany which we have found to be the most difficult to crack but obviously the prize is the biggest, at 82 million people.”

Every country has its own nuances, he said, and it’s important to understand the competition in each. “In our case, we would have 50 competitors right across Europe. Nobody is standing at doors waiting for us. But if you are persistent, you will get there in the end.”

The key is to innovate, he said. “We have to look at the local styling. The Germans expect a better product for a lower price, so we’ve had to adapt to that. There is no reason why any Irish company cannot succeed as long as they keep saying ‘What are the issues?’ and keep resolving them.”

Mistakes are inevitable. In Portwest’s case, a key hire made in Ireland and relocated to Europe turned out not to be the best strategy. “Now we employ French people in France, Germans in Germany and so on. The boots on the ground need to be local,” said Hughes.

Today the company, which sells globally, views the Eurozone as its local market. “We have the same currency, the same laws, there are no borders.”

Brexit uncertainties make looking further than the UK more important than ever. Portwest has responded to the UK’s imminent departure from the EU by shifting some of its warehouse activities.

“There are only two things we give away – warehousing and sales. Everything else we do in Mayo,” he said.

The company recently acquired 140,000 sq ft of warehousing in Poland, reducing its warehousing space in Britain. “We take the attitude of ‘plan for the worst’,” said Hughes. “So rather than have one major distribution centre servicing the EU we will have two.”

Regardless of the ultimate outcome of Brexit, such a move makes good business sense, he said. “We’ve been growing at around 25% a year and currently have nine international warehouses, but from a Brexit point of view, we only had one distribution centre in Europe, so that will now go to two.”

Language and culture are not barriers so much as issues to be resolved, he said. “You need to see (the Eurozone) as a local market and get out there and invest,” he said. “Sales are going to cost you initially but once you make that initial investment, once you get a taste for selling into one country in Europe, you’ll find it as easy as selling in Ireland – and then you will keep going.”

Ambition Benelux

Ambition Benelux: Big data, big opportunity

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They say every cloud has a silver lining. And in Benelux, there is a very large cloud, and, for the right business, not only a silver lining but a golden opportunity: cloud computing and big data.

 

Already one of the physical gateways to Europe – through Amsterdam, one of the most advanced and busiest ports in the world – the Benelux region is positioning itself as one of Europe’s biggest virtual gateways – thanks to the breakneck rise of the global digital economy.

The figures are truly astonishing and show the transformative nature of the growth of big data. It is estimated that 90% of the world’s data was created in just the last two years alone.

By 2021, according to Stijn Grove, managing director of the Dutch Data Center Association, the digital economy will account for more than half of Holland’s GDP.

“Everything that happens online goes through a data centre,” said Grove. “We are fast approaching what some are calling ‘a data singularity’ with the advances in machine learning, AI, the Internet of Things and self-driving cars. The demand for low latency data centres to handle this is huge.”

“All of this is interconnected and delivers on the digital economy,” Grove told firms attending the Ambition Benelux event at Enterprise Ireland’s Dublin offices. “For example, if you want to hop in an Uber, it requires the traffic information, the weather, the locations of drivers and it is provided to Uber in a split second, so they can combine it and display the relevant information to the customer.

“And this is replicated in any online app or digital product or website. This happens in the background and has led to big hubs springing up in the world to accommodate it.”

 

Why Benelux has become a data centre hub

The Netherlands has been quick to adapt to the new digital landscape and is one of the top five data centre hubs in Europe. It is already home to some of the biggest data handlers in the world, housing data centres for the likes of Google and Microsoft, and has averaged 18% YoY growth in data centre provision for the past seven years.

Currently, the main data centre provision is in Amsterdam itself, accounting for 215,000 sq.m of the total 308,000 sq.m of data floor space. Others are regional centres around the country and two hyperscale centres. Together they account for 1,300 megawatts of power use.

The trend shows no sign of slowing. Currently 20% of all foreign direct investment in the Netherlands is in data centre-related sectors. That is forecast to rise to 25%, said Grove.

In 2017, Equinix built the €200 million AMS4 data centre in Amsterdam, housing almost €1 billion in IT equipment but the recent Ambition Benelux event at Enterprise Ireland’s Dublin headquarters was told it would be filled with data within the next two years.

 

Opportunities for Irish construction companies

 It should alert Irish firms in construction, IT and project management. There is now high demand in all of these areas, as demand outstrips supply in the local market. According to Grove, the shortage in expertise and skilled personnel is also experiencing a double-down effect as Dutch firms, employers and other bodies look to Brexit-proof their long-term infrastructure plans by sourcing alternatives to UK suppliers.

This should provide the ideal impetus for firms looking to diversify their export-side, said Richard Engelkes, Enterprise Ireland’s Senior Market Advisor in Construction Products and Services to the Benelux region.

“Currently, 35% of our exports go to the UK and 59% of this is in construction. What we have in the Benelux region is a fast-growing market and, in particular, with cleantech, pharma and data centre construction, there is a demand for the expertise of Irish firms. Irish expertise in these areas is highly respected and highly sought after. They have an international reputation in building and delivering difficult and complex structures,” says Engelkes.

In acting as a digital gateway to Europe, there are also challenges, not least in powering the data centres themselves. The energy footprint of the data centres sits at 1,300 MW. By comparison, Amsterdam the city needs 400 MW to function.

“There is no country in the world that built its power grid to foresee and meet these challenges,” says Grove. But these challenges also raise opportunities for Irish firms specialising in power and renewables solutions.

Grove added: “The market is good, demand is big. We have a need for good personnel and services and the companies here are looking for long-term contracts and partners to bring certainty to the growth. Companies here can see it is accelerating and they are looking for at least certainty in their supply chain. With Brexit, we are seeing firms preparing for non-UK suppliers and this puts Irish counterparts in a great position.”

Irish firms looking to take advantage of opportunities should think about Dutch partners, says Grove. As Dutch construction firms move into the data centre build sector, they need good services, contractors and expertise.

“It is already known that Irish firms have the expertise, the Irish advantage,” said Engelkes.

Thanks to that positive sentiment, Irish firms will find that the door to this market is already open.

 

Learn more on how Enterprise Ireland can support your business to export to new markets.

RD&I support takes SeaQuest Systems around the world

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Investment in research, development and innovation opened up a valuable new market for second generation marine equipment specialist SeaQuest Systems.

Based in Killybegs in County Donegal, SeaQuest Systems was founded by Bert Leslie, current managing director in 1986, serving local and national fishing fleet. Brian Leslie joined the company twenty years ago, after graduating from Dublin Institute of Technology with a degree in mechanical engineering.

Since then, the company has become a leader in the design and manufacture of pumps and hydraulic systems for fishing and offshore vessels. Its products are prized for the excellence of their design, sturdy construction and superior performance.

The company’s strong reputation in the fishing sector led to an unexpected call from a company in an entirely new industry for SeaQuest Systems – aquaculture.

“One day we got a call out of the blue from an aquaculture company in Norway, to ask if we could design and build a pump to move salmon,” explains Brian.

The Norwegian company was searching for a solution to a recurring problem with farmed salmon – sea lice. With lice a naturally occurring parasite in wild salmon, nature’s remedy is simple – when salmon swim back upstream to their spawning grounds, the freshwater kills salt-loving lice.

As farmed salmon don’t make that trip, sea lice numbers proliferate in the confines of seawater cages.

 

Innovating a sustainable solution

“Freshwater kills off sea lice but, in this instance, it’s not a sustainable solution,” says Leslie.  “Similarly, the traditional way to manage the problem, through the use of antibiotics, is not a long-term solution because anything treated that way becomes resistant to it. Of course, consumers don’t want to think about antibiotics ending up in their food either, so there has been a move away from that approach for a number of years.”

With transferring salmon into slightly warmer seawater being shown to work, the Norwegian company wanted to know if SeaQuest could engineer a pump to do just that. “I told them I didn’t see why it wouldn’t work,” says Leslie.

“My feeling was that we’d give it a good go. Either way, it would be the cheapest R&D we’d ever do. If it worked we’d have a new customer and it was a good way to check out a whole new market.”

Aquaculture, or farmed fish, is a growth industry. “Ultimately it is going to be bigger than fishing as a sustainable way of feeding people,” says Leslie.

But only if it solves the problem of sea lice.

SeaQuest set to work designing, manufacturing and testing a pump that could safely transport the salmon from cold to warmer water and back. Getting the solution right was painstaking.

“Our earliest attempts didn’t work but it was only when we installed windows into the test pump that we could see why. What was happening was that the smaller fish would go with the flow but the bigger ones would swim against the current. It comes naturally to a salmon to do that but they were getting bruised and stressed, and in some cases dying. In the end, we could see that rather than adapt one of our own pumps, we needed to design an entirely new solution, something that would be completely stress-free for the salmon.”

SeaQuest was already renowned as one of the best makers in the world of pumps for pelagic fishing. “That’s why the Norwegian company came to us with its problem. Their problem piqued our interest, ultimately opening the door to an entirely new sector for us.

“Once we got a feel for the potential opportunity – given the size of the aquaculture market – we reckoned we needed to invest around €360,000 to take advantage of it.”

 

Using R&D funding to target commercial opportunities

The company made a successful application to Enterprise Ireland for R&D project funding. “One of the things we stressed in our application was the time-sensitive nature of the R&D project. We needed it to be ready in time for Aqua Nor in August 2017. That is the world’s biggest aqua culture trade fair and takes place biennially, but we also needed the pump to be fully tested before the show.”

Not alone did they achieve both goals but such was the pump’s success in use that it sparked enormous interest at Aqua Nor. So satisfied was the Norwegian customer that it acquired worldwide distribution rights for the pump from SeaQuest.

“It’s an arrangement that suits us perfectly, as it will bring our brand around the world, without requiring a major sales input for us.”

The success of the R&D project has helped grow the business, which employs 60 people. “We are now expanding our facilities again, just three years after having already extended. It’s happening sooner than we had expected to due to demand driven by that R&D project, we will be investing approximately €3.5 million in this new expansion and will expand our workforce.

“Focusing on Norway was hugely helpful because Norway is the biggest aquaculture country in the world. What it does in aquaculture, the rest of the world follows.”

 

The importance of innovation

The Enterprise Ireland RD&I grant application process was straightforward. SeaQuest is also applying for a patent for the pump, and hopes to avail of the lower tax rate applicable under the Revenue’s Knowledge Development Box initiative. Much of the content used in its Enterprise Ireland application will be suitable for Revenue, streamlining the process, Leslie comments.

The timing of the new intellectual property couldn’t be better either, as a patent currently of value to SeaQuest heads towards its end of life.

 “Innovation is key for us because we don’t want to compete on price,” he says.

But while Brian has been an innovator ever since he designed and built his first fish pump while still at college, until now he never viewed SeaQuest’s innovations as research and development.

“We never thought of that work as R&D. We are all about innovating, in so far as clients have a need, we build a solution. We’re always trying to make our clients’ job easier, that’s just what we do. To me, R&D was always something I associated with paperwork.”

The impact of the innovation support SeaQuest received from Enterprise Ireland rectified this misperception. RD&I is now something that Leslie expects SeaQuest to do a lot more of.

“Because Ireland is never going to be the cheapest place to do something, we have to do it better, we have to innovate.”

For more information on how Enterprise Ireland supports R&D visit our innovation supports.

Irish companies build on UK construction success

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Donal Byrne, a senior development adviser for the construction industry at Enterprise Ireland, explains why Irish exporters in the sector are winning business in the UK.

There are high-potential opportunities for Irish exporters in the UK construction sector notwithstanding challenges posed by Brexit. Global Irish construction industry services and goods exports were valued at €1.7 billion in 2016, while the number of people employed by firms supported by Enterprise Ireland is projected to increase from 33,000 last year to 40,000 by 2020. For the offsite construction subsector, the UK accounts for the vast majority of Irish exports.

A harsh winter, rainy spring, and the collapse of Carillion in January, with write downs on bad loans estimated to have exceeded £1 billion, put a dampener on UK construction activity in the first quarter of the year. Analysts are nonetheless predicting a ‘hockey stick’ progression for the sector in 2018, similar to that experienced in 2017.

A seminar, organised by Enterprise Ireland in conjunction with the Irish Precast Concrete Association (IPCA), heard that the chief source of this optimism is the British government’s commitment to a £650 billion pipeline of construction projects. While market volatility may well cause a periodic dip in sales for distinct sectors and individual companies, overall demand in UK construction remains strong.

 

Opportunities in UK construction

Simon Rawlinson, Partner and Head of Strategic Research and Insight with Arcadis Design and Consultancy, and a member of the UK’s Construction Leadership Council, told the seminar that he sees opportunities for Irish construction industry companies in a range of areas, particularly in energy, waste, transport, telecommunications, and social housing and urban regeneration. 

The scheme with most potential is the HS2 high-speed rail link, with £55.7 billion budgeted for phases 1 and 2 of the project.

The British housing market is buoyant, noted Rawlinson, especially in regions outside London, notably Manchester and the Midlands.

A short-term skills shortage forecast for the UK industry can also benefit Irish offsite construction companies. The UK faces capacity issues due to significant remedial works required nationwide as a result of projects put on hold by the Carillion collapse resuming in catch-up mode. Brexit is also a factor, with many European workers leaving the UK.

There are particularly strong opportunities for building sector companies who are skilled in the use of digital design and building information modelling (BIM). There is also a new emphasis on optimising long-term product performance, using smart technology and the internet of things. In housing, offsite manufacturing and modular building are growth areas. 

  

How Enterprise Ireland supports construction industry exporters

Enterprise Ireland supports construction industry exporters in three key ways. We assist companies to improve existing products and to develop new solutions that meet market needs and deliver added value. We run programmes that help to develop a corporate culture of continuous improvement to increase productivity and reduce environmental impact and we run programmes focused on improving, and broadening, the capabilities of leadership teams.

We also run Brexit Advisory Clinics for exporters and provide eligible companies with grants of up to €5,000 to help them mitigate risks of potential impacts.

Even a soft Brexit may create new obstacles to navigate. For example, if Britain remains in the European Customs Union, additional paperwork will still be required of exporters at UK border crossings. Using a freight forwarding company and a customs brokerage can reduce logistical headaches but additional management time must still be set aside to instruct third parties.

Because border hold-ups will be more likely post-Brexit, exporters will need to factor in higher costs for delays in estimated delivery times. In the construction industry, where ‘just-in-time’ delivery is a feature of many supplier contracts, it may be necessary for exporters to invest in UK-based depots to hold goods temporarily before a specified delivery date. One option discussed at the seminar suggested that exporters could invest in joint warehousing facilities to reduce the cost burden on individual companies.

Brexit is a new obstacle to trade but is not insurmountable. Specialist expertise and high-quality products that address real needs will always find a market.

This article was originally published in the Sunday Independent.