2006
(To view the Export Ireland Survey please click here
The changing attitudes of Irish exporters on how they view the services offered by financial institutions, the value of credit insurance, ways of dealing with exchange rate issues and the value of Government support was revealed today at the launch of the Irish Exporters Association’s (IEA) 2006 Survey and International Finance Review. The Survey was launched today (7.12.06) at the National Library in Dublin.
The Survey launch was attended by Mr Michael Ahern, T.D., Minister for Trade, who welcomed the publication, and encouraged the financial community to use the valuable information obtained from some 1,400 exporters who participated in the survey to introduce innovative new services to assist the competitiveness of exporters and enhance the value of existing services to exporters and investors.
Attitudes to Banking SectorAccording to Mr John Whelan, Chief Executive of the IEA, the services export sector is the fastest growing internationally, and now accounts for 34% of total Irish exports. “Companies in the services sector tend to have less of the traditional assets with which to secure bank loans or procure forward contracts to hedge against foreign currency exposure,” said Mr Whelan. He added: “We would appeal to financial institutions to take the time to understand this fast growing and very important emerging sector of Irish trade.” He also said that the survey showed a strong desire from exporters for more services from financial institutions in the areas of factoring, debt collections services, and international credit rating information.
The survey showed that there was a very high satisfaction ratio with the banking sector by manufacturing exporters with 88% stating they were happy with their bank. However, services exporters were less happy with 18% stating they were not satisfied with their main bank service and 15% stating that their banking support had worsened in the past year. In terms of which banks in Ireland are used the survey found that Bank of Ireland and AIB provided 72% of exporters’ main relationship banking needs “However, some 34% of exporters went to another bank for their export trade finance, thus leaving the market open to Ulster Bank, Anglo Irish bank, NIB, CITIBANK, Barclays, HSBC, and others.
The survey comparison with the U.K. is very favourable on this issue as 46% of U.K. exporters rely on overdraft facilities for their trade finance. The survey also showed that Irish exporters managed to improve cashflow by reducing the credit period they offered to customers over the past few years. Within Europe the survey showed that the 60 day credit terms given to 53% of their customers in 2004 whereas in 2006 that credit period was only give to 33% of their customers. Bad debts continued to be a problem, but mainly on home sales with 54% of exporters reporting bad debts. The biggest problem on export markets was in the UK, with 25% of exporters reporting bad debts.
Foreign Currency Issues
The survey has thrown up some positive results in the area of the euro. The SME export sector now denominates its invoices in euro 77% of the time. Of course, the euro is the currency of choice in the eurozone, but buyers in the UK buyers are now accepting the euro for 34% of Irish export and in the USA buyers are accepting the euro on 20% of Irish exports. Remarkably, exporters to the USA now rate the logistics/transport issues since the introduction of 9/11 anti-terrorism measures as equal to the US dollar currency management problems. Mr Whelan said that the survey indicates the emergence of a mature phase amongst Irish exporters in their ability to negotiate natural hedging against foreign currencies by selling in euros. There is also strong evidence that the past decade of rapid sales growth by exporters has enabled the build up of retained profit which is now being used in funding further exports growth, particularly amongst the smaller exporters which the Survey focused on ‘’
Credit Insurance
Only 18% of Irish Exporters use credit insurance while exporters in most of our trading partners use credit insurance to reduce the risk of trading abroad. The reasons given by Irish exporters said that they did not use export credit schemes available in Ireland because they thought them to be too expensive, overcomplicated and those who had previously used export credit insurance cited a difficulty in collecting from insurers. However, John Whelan said that the low level of usage of export credit insurance schemes by Irish exporters, is not untypical of the picture seen in Europe or the USA amongst small exporters. Governments in many of these countries, however, have addressed the problem with the introduction of preferential low cost schemes, in conjunction with Insurance/Banking institutions. “We have to realise that small companies risk high failure rates in exporting if the markets they export tobecome unstable, as has been the case in the Middle East and in many South American and African countries. If we are serious about building up indigenous Irish industry to replace the FDI multinational exporters who have been the main drivers of our export growth, we must seriously look at a National Credit Insurance scheme for small business that wish to export,” said Mr Whelan. He noted that the UK government has introduced a low cost rapid export Insurance scheme for small business. Canada has also introduced its Emerging Exports Insurance scheme while Germany, Hungary, and Turkey have also introduced special schemes for SMEs. “Clearly, there is a need to introduce initiatives into the Irish market to encourage greater awareness and adoption of specially designed credit insurance products for small exporters,” concluded Mr Whelan.
Sponsors of the survey were Bank of Ireland Global Markets and Intrum Justitia. Ms Leslie Cosgrave of Bank of Ireland Global Markets said that his company was delighted to be a sponsor of the publication of the Survey. “We believe that delivering a first-class treasury service to our customers starts with a detailed understanding of their businesses and the key challenges they face,” said Ms Cosgrave. She added that findings enforced Bank of Ireland’s view that Irish exporters can improve their bottom line by implementing treasury risk management solutions to protect their business from currency and interest rate fluctuations. Mr Nick Biggam, Chief Executive Officer of Intrum Justitia said that the findings from the Export Ireland 2006 Survey were consistent with his company’s own experiences and highlighted the significant and growing difficulties that Irish companies have in getting paid on time by their overseas clients. He added: “Working with specialist collection companies such as Intrum Justitia is just one solution that businesses are turning to in order to address this issue."
ENDS
For a copy of the Full Export Ireland 2006 Survey and International Finance Review, Please contact Kellymarie Gleeson at kmgleeson@irishexporters.org
 |
 |
