Business News

Small firms fear Brexit tariffs and CAP budget cuts

Tariffs, currency fluctuations and corporation tax were among the concerns raised by more than 230 small business owners and interest group representatives at a Brexit event yesterday.

The event held in Loughrea, Co Galway, and organised by Supermac’s, was addressed by RTE Europe editor Tony Connelly, and Farmers Association president Joe Healy. Among the concerns aired by those present were the implications for small businesses in the event of a hard Brexit.

One such business owner was Mícheál Quinn, owner of Quinn RV SIP, a vehicle manufacturing company employing just over 100 people in Athenry, Co Galway.

Quinn RV SIP exports as much as 70pc of its products to the UK. Mr Quinn said he feels SMEs are largely being ignored by the Government and Enterprise Ireland.

By attending the event, he hoped to get “some form of clarity” around Brexit, but added that he didn’t think he would. “It is becoming difficult to get straight answers,” he said.

The company has projects scheduled for the UK market next spring, and he told the Irish Independent that a number of key customers in the UK have contacted him for assurance that he will still take on UK-based work “which is comfort to us”. However he remains concerned about the impact of possible tariffs and currency fluctuations on this business.

Another SME owner said that while what Brexit will look like remains unknown, it was “reassuring” to be in a room full of businesses with similar concerns.

Worries were also raised around Ireland’s corporation tax rate. The 12.5pc rate has long been a point of contention among some other European nations.

A member of the audience asked if the rate would now come under pressure at European level, given that Ireland was losing a “huge ally” in Europe once the UK leaves the EU.

“There is always pressure on Ireland to adjust our tax regime and that pressure is always resisted,” Mr Connelly said.

However, Mr Connelly added that for any change to the rate to take place, there would need to be unanimity from EU member states on the matter, and Ireland has a veto on any changes to tax rules.

Mr Healy said that some people questioned whether Ireland had allowed itself to become too dependent on the UK as an export market for food.

However he pointed to fact that when Ireland first joined what was then the EEC in 1973, 70pc of agri-exports were going to the UK. Today this figure is around 40pc.

Nonetheless, the agri-food sector is set to be disproportionately impacted by Brexit. Mr Connelly noted that within weeks of the Brexit vote taking place, five mushroom businesses in Ireland went to the wall, due in part to the impact of the fall in the value of sterling.

Ann Mitchell, a member of Galway IFA, asked whether the budget for Europe’s Common Agricultural Policy (CAP) would by affected under a no-deal scenario between the UK and the EU.

“The EU budget would be impacted and CAP would come under attack,” Mr Connelly said, adding though, that he was of the view that the Commission didn’t want a radically cut CAP budget because of Brexit – but that was under the scenario that there would be a withdrawal agreement. “I think everything will be hit if there is a hard Brexit,” he added.

Mr Healy went on to say that a fear for the IFA is that the UK, post-Brexit, pursue a “cheap food policy… importing food from places like South America”.

Mr McDonagh, CEO of Supermac’s, said that he was hosting the event because Brexit is something “we are all still learning about”.

Article Source: http://tinyurl.com/kbwqb42

Manufacturing growth falls in September

Growth in the Irish manufacturing sector fell slightly in September.

The Irish Manufacturing Purchasers Managers’ Index (PMI) recorded a reading of 56.3 for the month, down from the seven month high of 57.5 reported in August.

Any reading over 50 is deemed growth.

Overall, and the manufacturing sector continued to perform strongly in September, according to the report from IHS Markit.
New orders and output rose sharply again, while firms responded by upping their rate of job creation, with employment in the sector increasing at the fastest pace in seven months.

The rate of input cost inflation remained elevated, encouraging manufacturers to continue raising output prices.

New export business also increased, and at a broadly similar pace to the previous month.

Looking forward and firms remained confident that output will increase over the coming year. Optimism reflected predictions of higher new orders, the launch of new products and higher operating capacity.

“The Irish manufacturing sector continued to buck the recent trend of weakening growth seen in the eurozone, with manufacturing output rising sharply again in September,” Andrew Harker, associate director at IHS Markit, said.

“The main highlight from the latest PMI survey is a sharp pick-up in the rate of job creation, with employment increasing at the fastest pace in seven months as firms responded to higher workloads and looked to expand capacity.”

Article Source: http://tinyurl.com/kbwqb42

Problem Solver: Do I really need to take a startup course to go out on my own after 15 years?

Q Having worked for 15 years for an employer, I am now starting my own business. I am being encouraged to do a startup course, which I feel is unnecessary after my years in business. What do you think?

A You are being given good advice. Most of these courses are run by your Local Enterprise Office and the general feedback I get from anyone who has completed them is very strong.

The fact that you have worked for a long period in industry will assist your business in a very big way and has probably allowed you to develop the business model you are planning to come to market with. You will, however, be dealing with lots of new areas which you have never encountered in the past, like tax, Vat, payroll, and doing your own book-keeping.

Many people who were formerly in industry don’t pay enough attention to these headings and really struggle with them when their business goes live.

Don’t underestimate the practical aspects of running a business which can sometimes be every bit as critical as generating sales and developing marketing programmes.

You will also find as you complete this course, you will be involved with a mix of 10 or 15 other businesses and the networking and knowledge-sharing through these groups can also be phenomenal. I wish you well and would really encourage you to do this course.

Q I am finding it increasingly difficult for my business to stand out in what has become a mature sector that I am trading in. My competitors have caught up with me and I am not sure what to do now

A If you read many of the textbooks about how businesses and sectors evolve, what you are describing happens in most business sectors. The sector starts off with a small number of players who compete and create a competitive advantage over each other. As the decades progress, they improve their offers, copy each other and generally try to capture as much market share as they can. A point is eventually reached where there is very little difference between each of the operators.

While the above is true, I still subscribe to the idea that any business can continue to differentiate itself from its competitors for an unlimited period, but you have to look very closely at the business.

One of the things the team in Superquinn were very good at was identifying changes that could be made that would really benefit the consumer – like recognising that customers really wanted their vegetables to be ultra-fresh. We developed a scheme to cut and sell sensitive fresh products within 24 hours, so consumers buying lettuce, cabbage, cauliflower, etc, could be guaranteed their product was at maximum freshness. While our competitors could all have done this, none of them spotted the opportunity until after we succeeded in attracting attention with the scheme. By the time they copied us, we had moved on to the next innovation.

Another simple example was when we guaranteed all of our steaks to be 100pc tender and offered to refund any customer that felt otherwise. We caught the market completely off guard and while our competitors could have put the same schemes into place, they didn’t see the opportunity. We over-traded in beef for many decades while our competitors tried to catch up.

There are dozens of innovations to the operating model that you can make and I don’t subscribe to the idea that this process ever stops. It is always possible to keep ahead of your competitors. Keep your team energised and focused and listen to your customers

Article Source: http://tinyurl.com/kbwqb42

Small firms fear Brexit tariffs and CAP budget cuts

Tariffs, currency fluctuations and corporation tax were among the concerns raised by more than 230 small business owners and interest group representatives at a Brexit event yesterday.

The event held in Loughrea, Co Galway, and organised by Supermac’s, was addressed by RTE Europe editor Tony Connelly, and Farmers Association president Joe Healy. Among the concerns aired by those present were the implications for small businesses in the event of a hard Brexit.

One such business owner was Mícheál Quinn, owner of Quinn RV SIP, a vehicle manufacturing company employing just over 100 people in Athenry, Co Galway.

Quinn RV SIP exports as much as 70pc of its products to the UK. Mr Quinn said he feels SMEs are largely being ignored by the Government and Enterprise Ireland.

By attending the event, he hoped to get “some form of clarity” around Brexit, but added that he didn’t think he would. “It is becoming difficult to get straight answers,” he said.

The company has projects scheduled for the UK market next spring, and he told the Irish Independent that a number of key customers in the UK have contacted him for assurance that he will still take on UK-based work “which is comfort to us”. However he remains concerned about the impact of possible tariffs and currency fluctuations on this business.

Another SME owner said that while what Brexit will look like remains unknown, it was “reassuring” to be in a room full of businesses with similar concerns.

Worries were also raised around Ireland’s corporation tax rate. The 12.5pc rate has long been a point of contention among some other European nations.

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A member of the audience asked if the rate would now come under pressure at European level, given that Ireland was losing a “huge ally” in Europe once the UK leaves the EU.

“There is always pressure on Ireland to adjust our tax regime and that pressure is always resisted,” Mr Connelly said.

However, Mr Connelly added that for any change to the rate to take place, there would need to be unanimity from EU member states on the matter, and Ireland has a veto on any changes to tax rules.

Mr Healy said that some people questioned whether Ireland had allowed itself to become too dependent on the UK as an export market for food.

However he pointed to fact that when Ireland first joined what was then the EEC in 1973, 70pc of agri-exports were going to the UK. Today this figure is around 40pc.

Nonetheless, the agri-food sector is set to be disproportionately impacted by Brexit. Mr Connelly noted that within weeks of the Brexit vote taking place, five mushroom businesses in Ireland went to the wall, due in part to the impact of the fall in the value of sterling.

Ann Mitchell, a member of Galway IFA, asked whether the budget for Europe’s Common Agricultural Policy (CAP) would by affected under a no-deal scenario between the UK and the EU.

“The EU budget would be impacted and CAP would come under attack,” Mr Connelly said, adding though, that he was of the view that the Commission didn’t want a radically cut CAP budget because of Brexit – but that was under the scenario that there would be a withdrawal agreement. “I think everything will be hit if there is a hard Brexit,” he added.

Mr Healy went on to say that a fear for the IFA is that the UK, post-Brexit, pursue a “cheap food policy… importing food from places like South America”.

Mr McDonagh, CEO of Supermac’s, said that he was hosting the event because Brexit is something “we are all still learning about”.

Article Source: http://tinyurl.com/kbwqb42

Eight things to know about the pay-rise plan for public sector workers

Public sector workers will benefit from changes to austerity-era cost-cutting measures as pay rises are on the way.

Pay hikes worth €3,300 are on the way for more than 60,000 workers – but it may not be enough to avoid strikes.

Here’s everything you need to know.

What is the problem with recruits’ pay?
The Government brought in a so-called ‘yellow pack’ two-tier pay system during the recession in a bid to cut costs when the Exchequer finances were in crisis. Former finance minister Brian Lenihan announced the cuts to new recruits’ pay in 2010, and they went on rates 10pc lower than their longer-serving colleagues.

Did this improve for workers since the recession ended?
The 10pc cut was replaced with two lower starting points at the bottom of the pay scales under the Haddington Road agreement in 2013.

This meant the new entrants went on the same scale as colleagues, but it took them two years longer to reach the maximum point.

What are increments and payscales?
Public servants are on incremental pay scales that mean pay rates might start, say, at €23,000, which is called the first point in the scale, and rise annually by €5,000 increments until they reach the top of the scale, which could be €50,000. The length of pay scales vary and some grades of staff may have 12 points and others 27.

How many new entrants are there?
There are 60,513, or roughly one in five of the public service workforce.

What kind of pay rise can the new recruits expect?
The average public servant will get a €3,300 increase, as outlined in an Expenditure Department report last March.

What about nurses, teachers, gardaí and soldiers?
The average payment to education workers is €3,771. Teachers make up 16,054 or 68pc of these new entrants;
The average payment to health workers is €3,318. Nurses are 38.5pc of this;
The average civil servant will get €2,548;
The average local authority worker will get €1,875;
The average member of the Defence Forces will get €1,603;
The average garda will get €1,500.
Aren’t public servants getting pay rises already?
They are already on course to get pay rises worth more than 7pc over the course of the current pay deal.

What does the deal mean?
The new entrants will bypass point four and point eight of their pay scales. They will get these benefits from March next year.

Article Source: http://tinyurl.com/kbwqb42

Tax advisers demand urgent SME action

Tax advisers have written to Finance Minister Paschal Donohoe claiming tax law is in need of “urgent reform” in order to support the SME sector through Brexit.

Umbrella group the Consultative Committee of Accountancy Bodies – Ireland (CCAB-I) highlighted how changes to the Employment Investment and Incentive (EII) scheme have had “a substantially negative impact on funding for startups and established SMEs”.

A public consultation was conducted on the topic in May.

“Our members wish to emphasise the urgent need for reform or replacement of the EII scheme to get much needed funds into startups and SMEs, who cannot otherwise access the necessary finance,” said the accountancy body.

The letter also raised concerns about the impact of transfer pricing rules. “In our view, extending transfer pricing rules to SMEs would merely increase the burden of paperwork without significantly enhancing the integrity of the system.”

CCAB-I suggested a postponed method of accounting for Vat should be introduced in the Finance Act 2018 so Irish businesses importing goods from the UK will not incur “a potentially crippling upfront Vat cost”.

The letter was also sent to Martin Shanahan, CEO of the IDA, and Julie Sinnamon, CEO of Enterprise Ireland.

Article Source: http://tinyurl.com/kbwqb42

Central Bank’s arrears figure ‘overstated by a huge amount’

The Central Bank has been producing data that “grossly” overstates mortgage arrears, calling into question a raft of home repossessions.

Statisticians in the bank have admitted there is a problem, and are set to change how they calculate missed payments.

They have been accused of producing “grossly exaggerated” mortgage arrears figures.

It means that the official figures overstate the amounts of money people actually owe.

The issue stems from the way vulture funds treat arrears data.

Experts say the revelation could have huge implications for people facing repossession of their homes.

People may lose their homes if a judge is told their arrears are higher than they actually are, experts warned.

Inflating of the figures does not appear to have an impact on the numbers of homeowners behind on payments, but does exaggerate the amount they owe.

Founder of the Askaboutmoney.com website Brendan Burgess discovered the problem, which he said throws the entire system for measuring arrears into doubt.

Earlier this month, the Central Bank produced figures showing almost 5,000 residential mortgages owed to vultures were in arrears for more than two years. The arrears owed total some €834m.

But the Central Bank has now admitted that its quarterly publications on arrears are “not providing the full picture of the underlying arrears on the loan”.

“They are admitting their figures are overstated. In fact, they are grossly exaggerated,” Mr Burgess said.

The problem stems from the fact the Central Bank is following controversial calculations of arrears used by vulture funds.

This involves counting an entire loan as being in arrears if it is called in by the lender.

Mr Burgess gave an example of someone who has a mortgage of €100,000, but they are €10,000 in arrears.

If the vulture fund decides to call in the loan, it treats the entire loan as being arrears.

This means the amount of arrears effectively balloons overnight from €10,000 to €110,000.

“This is not what the ordinary woman in the street understands by arrears,” he said.

Mr Burgess added: “The Central Bank figures show that the total arrears for customers over two years in arrears amounted to €1.9bn. It’s hard to know the correct figure, but I would say it’s overstated by about €500m – a huge amount.”

The revelations come after Start Mortgages and vulture fund Tanager were recently forced to admit they were making mistakes in how they calculate arrears owed by mortgage holders.

The Central Bank admitted there is a problem.

It said it would be changing its calculation methods used for arrears of unregulated loan owners, or vulture funds.

It now believes “that recording loans fully in arrears due to full loan demand is not providing a full picture of the underlying arrears on the loan”.

“The consistent treatment recording of arrears across all loan owners is a priority and we will be clarifying the treatment and requesting revision where appropriate,” a spokeswoman said.

Article Source: http://tinyurl.com/kbwqb42

Credit unions to pay refunds after miscalculating interest on loans

More than 150 credit unions have to carry out an expensive trawl of their loan books after it emerged thousands of members have been overcharged on loans.

The overcharging amounts are small, but the Central Bank has ordered credit unions to provide information on how they deal with accrued interest on top-up loans.

Average overcharged amounts are only €12 per loan, but the revelation is set to be an embarrassment to the movement – and cost them a fortune to investigate.

It is one of the first times credit unions have been caught up in an overcharging issue. Banks are repeatedly having to repay consumers for miscalculating what they charge.

It comes after credit unions, which always emerge from polls as having a high standing with the public, have been hitting the headlines for the wrong reasons.

These include the largest credit union in the State facing legal action from the representative body for the sector, money going missing at the Citybus credit union in Dublin, prize draws being won by large numbers of directors, fraud charges at some credit unions, and a record money- laundering fine for a credit union.

The latest controversy involves credit unions that use a financial software package from one IT firm. The software package appears to have miscalculated interest due on top-up loans. It is understood the mistake is of a highly technical nature.

This is similar to what happened at AIB in the summer. Around 85,000 AIB phone and internet banking customers were refunded, having been affected by a bank error in their loan top-up calculation.

It is not known how many credit union members are involved, but one source said the issue could affect thousands of people.

Refunds will be sent to them, but the credit unions affected by the miscalculation are likely to have to spend a multiple of the total refund costs investigating the issue.

A spokesman for the Central Bank said: “We are currently engaged in an investigation of potential interest over- collection in relation to top-up loans at a number of credit unions.”

It added that where there is an over-collection of interest from members due to operational issues, it expected credit unions to pay refunds promptly, and to implement robust systems and controls to ensure the issue did not reoccur.

The Irish League of Credit Unions said it was aware that Central Bank had contacted credit unions to seek information on how individual credit unions dealt with accrued interest on top-up loans.

Article Source: http://tinyurl.com/kbwqb42

More females required to meet construction demand – CIF

Increasing numbers of female construction workers is key to solving Ireland’s housing and infrastructure crises.

This is according to the Construction Industry Federation (CIF).

Ahead of the launch of its first ‘Diversity and Inclusion Guidance’ document for the construction sector, aimed at addressing gender imbalance in the industry, key construction leaders said that more female workers are key to meeting the current demand for skills, and to deliver Ireland’s urgent housing and infrastructure needs.

“Increasing diversity and gender equality is not just the right thing to do, it is critical for our industry,” Jean Winters, director of industrial relations and employment services with CIF, said.

“A disengagement with construction is unconsciously driven by the education system at a very young age for girls. We have to tackle misconceptions about the industry at this level and this will form part of a national awareness campaign the CIF is undertaking to promote the diverse careers in the industry

The document is due for release at the CIF’s ‘Building Equality’ event this morning, the second event this year as part of the representative body’s year-long #BuildingEquality campaign to increase the number of women in the industry and the visibility of those already working in construction.

Speakers at this morning’s event include Phil Kane, country manager, Eaton Corporation Ireland, Minister of State David Stanton, Department of Justice and Equality, and Anne Heraty, founder and CEO of CPL Resources.

Earlier this year the CIF commissioned a survey to discover exactly how many women are working in the Irish construction industry, in what roles, and at what levels.
The survey also investigated the views of female workers currently working in the industry, as well as the views of employers regarding diversity and inclusion in construction.

The results found that over 70pc of construction companies recognise the need for more women in the industry. However, on average approximately only one in 10 construction workers are female.

The survey also found that on construction sites, 99pc of workers are male, whilst in offsite roles, 54pc are male and 46pc are female. Of those women working in construction roles considered ‘offsite’ the majority work in administration, finance, HR and marketing.

“There are major opportunities in the industry,” Ms Winters continued.

“The #BuildingEquality campaign asks male and female leaders in the industry to set the example and put equality of opportunity at the top of their agenda.”

Article Source: http://tinyurl.com/kbwqb42

UK warns there will be no Brexit deal unless EU softens on Irish border

Britain will leave the European Union without a deal unless the bloc’s leaders soften their position on the Irish border, Transport Secretary Chris Grayling told the BBC.

EU leaders abruptly cautioned May on Thursday that unless she gave ground on trade and the Irish border by November they are ready to cope with Britain crashing out.

“At the moment what the European Union is asking in and around Northern Ireland is simply impossible for any UK government to accept. And actually if they stick with that position, there will be no deal,” Grayling said.

“There’s tough language and actually a deal is done at the last. And I’m still confident that we will reach agreement,” he added.

Britain is due to leave the European Union on March 29, yet little is clear: There is, so far, no divorce deal, rivals to May are circling and some rebels have vowed to vote against a possible Brexit deal.

Article Source: http://tinyurl.com/kbwqb42