Frontline: "A 5% tariff will knock me out of the market"

Frontline: “A 5% tariff will knock me out of the market”

Gerry McIntyre, Cootehill Precision Engineering

Cootehill Precision Engineering is the classic manufacturing start-up, driven by one man with a vision and a passion. Walking around the plant with Gerry McIntyre, anyone who is not in the business would never figure out what the shiny steel objects piled on benches or in plastic bins are for – until he tells you that this is a custom sprocket for the glass industry and that big round thing with teeth is a heavy-duty gear for quarry machinery, while that odd-looking thing over there is an essential part of a pump for a huge milk processing plant.

“Half of our output goes north priced in Euros, and we are taking a beating,” he says. “There could be up to a hundred competitors within a 15-mile radius of Dungannon, small engineering works who are only too happy to take our business, so raising prices is out of the question no matter how far sterling falls. I have customers taking components at €49 and they tell me openly, if it goes to €50 we’ll get it somewhere else. Meanwhile the price of steel is going up but we are not big enough to offset the currency fall in our purchasing.”

Gerry’s products are heavy and bulky so looking for new markets further away is difficult. The only option is to compete more within the Republic, but that is hard going. We discuss the possibility – indeed the likelihood – of WTO (World Trade Organisation) tariffs on goods moving across the border. Gerry goes to a bin in his office and brings out a handful of small machined components that he dumps on his desk.

“I have no idea what the tariffs might be on these items, and I don’t know who to ring to find out. But I know this – even if the tariff is only 5%, coming on top of the fall in sterling that will knock me right out of the market in the north.”

We talk about the tariff database to be set up by Intertrade Ireland, CSO (Central Statistics Office) and the ESRI (Economic and Social Research Institute). We discuss the Intertrade Brexit Voucher scheme: up to £1000 or Euro equivalent for SMEs to buy in expertise, for example to research tariffs on engineering components. Gerry said he would check it out, but  he has strong feelings on the subject.

“Why should I even have to do that? Why hasn’t someone somewhere in the government already got that done, why are they not here today telling me about it? Look, I know what we have to do – look at all our costs one more time and do everything smarter. But the border is just 12 miles away and all my competitors on the other side have overheads for smaller than mine. Wages are lower and it is no coincidence that the dole is a lot lower as well. ”

In the production area massive lathes are dwarfed by huge, room-sized machines, average price around €100,000. These are CNC (Computer Numerical Control) milling centres. Gerry points at one of them: “That one was made in South Korea. I’ve just bought it for €150,000 – and that was second-hand. The trouble is, I can’t find an operator because there is a big shortage of these sorts of skills in Ireland. I’ve been advertising internationally and I got one answer, from the Czech Republic. So do I fly him over here for an interview? Innovation’s not a simple business.”

Cootehill Precision Engineering has held an ISO 9001: 2008 quality standard for the last 16 years.

The  Frontline Project was carried out by Brexit Border Blog on behalf of the British-Irish Chamber of Commerce and Chambers Ireland