Mr. Kevin Sherry:

I thank the committee for the invitation to attend today. I am joined by my colleague Garrett Murray, the department manager of our policy team and in the Visitors Gallery by Ms Deirdre McPartlin and Ms Anne Lanigan who are part of our newly established Brexit team.

The committee will know that Enterprise Ireland's activities are focused on supporting indigenous manufacturing and internationally traded services companies. We also have a responsibility for overseas direct investment in to Ireland in the food area. We support more than 5,000 companies in those areas. The contribution from those companies in employment is felt throughout the State, in every town, village and county. In 2015 those companies recorded record employment growth of 21,118 jobs, a net of 10,169 jobs. Of that increase, 64% of those jobs were created outside of Dublin. The total spend of those companies in Ireland was €23.8 billion in 2015 and between them their exports accounted for €20.6 billion, a 10% increase on 2014. We are forecasting that this year, those exports will reach the target we set of €22 billion.

The UK is a very important market which accounted for €7.5 billion of that €20.6 billion. In 2015 that market grew at the second fastest rate by 12%. We have, however, seen a trend where the UK market - as a percentage of exports over the last number of years - has decreased from 45% of the total exports of those companies in 2005 to 37% in 2015. The focus for Enterprise Ireland is to reduce that dependency and increase the penetration into other markets such as northern Europe, the US, Asia and the Middle East. A total of 1,476 of the 5,000 companies have recorded exports to the UK, so it is a very important market and those companies are significantly impacted by Brexit, as the committee can appreciate.

Of the 1,475 companies which have some level of exports to the UK, 355 have substantial exposure to the UK market and employ more than 24,900 people. Over 200 of those 355 companies would be deemed to be particularly challenged because they have a high level of sales to the UK. The UK is and will continue to be the largest market for Irish exporters in the short term. Our current activities and strategy for 2017 to 2020, which we are currently developing, will have the twin focus of trying to sustain and deepen the exports of those companies to the UK market and also expand their reach into other markets.

The primary cause of uncertainty in the short term as a result of the Brexit vote is currency volatility. On 7 October the exchange rate went over 90p. The sectors that are most impacted by that and which have a high level of exports to the UK are our construction services, engineering, agriculture machinery, timber, furniture and food industry. What is also very clear is that the impact of Brexit will not be temporary. It is structural change and we need to respond to it in that way. It requires a strategic response from Irish exporters and from Enterprise Ireland.

It is not the first time we have been in this situation. In 2009, when the euro and sterling were near parity, Irish companies successfully overcame those challenges, even though they went through a very painful process. Brexit will drive companies to focus on increasing their competitiveness, on innovation and on differentiating their products from their competition in parallel with going after new export markets. We are putting a lot of effort into supporting them in that area.

We surveyed our clients in the last number of months on their view on Brexit and their exposure. Of those companies, 29% said they did not expect the UK exit to impact substantially on their projections; 47% said it is too early to tell; and 26% said they will immediately focus on diversification. From Enterprise Ireland's perspective, we are focusing on supporting those companies in the areas of market diversification, planning their next steps, competitiveness and information innovation. As soon as the Brexit vote was announced, we launched a five pillar response in terms of our strategy. I will not go through the details because it is publicly available. It was focused on helping them with information about how to immediately respond from a currency point of view in terms of hedging; on trying to respond within the UK market and helping them to identify and progress their objectives in other markets; and on competitiveness and innovation.

The majority of our work with companies is on a one-to-one basis but we also work on the response of specific sectors. Two weeks ago was international markets week and we brought 140 of our overseas team, which is virtually all our overseas team, back to Ireland to meet with over 400 companies that are most exposed. During that week, we held over 1,400 one-to-one meetings with those companies. They were focused on assisting those companies plan for what is ahead. We also had a briefing to hear advice from entrepreneurs who have succeeded in scaling their business in international markets. During that week, we also held a number of specific sector workshops with sectors that are most exposed to Brexit to help them respond at a company and sector level. That was about understanding and defining the particular challenges and opportunities faced in each sector. That is central to our approach.

Brexit will continue to pose challenges for Irish exporters. This will be a marathon and not a sprint. It is very important to say that it creates opportunities. There are a series of sectors where there are specific opportunities. Our past experience of downturns and other challenges have positioned companies and incentivised them to look at other markets and broaden their base. Our focus will be on driving scale and expanding the reach of companies. That is what our strategy is focused on. Let there be no doubt that at the moment we have the strongest cohort of indigenous Irish companies that we have ever had. Part of that is a function of us having come through a very difficult period during which companies had to improve their competitiveness and focus on improving their international competitiveness. We are optimistic about the potential for Irish companies to come through this period of great difficulty stronger and to build their export base during that period.