In the past 24 months, the Brexit debate has taken many twists and turns but ultimately we are simply not that much further along from that date when Article 50 was triggered.
With the new deadline of October 2019 looming, there is breathing space for the UK government but still no clarity as to when and how the UK will leave the EU. With the current political instability in the UK at the moment, there is a risk that we will find ourselves in the same place in the Autumn as we were in the run-up to March 2019.
Getting momentum in the matter is difficult and will be more so as time rolls on.
What impact is it having?
As a Construction company in both the UK and Ireland, Sisk is feeling the impact of Brexit from both sides of the water. Ireland was thought to be a beneficiary of many firms looking to leave the UK. With a highly educated work force and a majority of English speakers, it was ready to receive the benefit of firms relocating.
This has probably not been as successful as was expected, given the lack of infrastructure in the Capital in relation to housing, transport, and education. Indeed, Paris, Luxembourg and Frankfurt have all been successful in attracting some of the financial services out of London but we should all be aware that there is a risk that some of the institutions may be looking further afield — say to the Far East. This would have, in our opinion, a detrimental impact on several industries and on London’s place in the world as a financial centre of excellence.
Generally, it is our experience that firms who are preparing for Brexit are investing heavily in this area. At Sisk, from day one, we have pulled together a team reviewing various impacts that may occur across many facets of the business. We have reviewed contractual obligations and inserted Brexit clauses where possible to assist in mitigating the impact. After all, it is still quite unknown.
We have had detailed conversations with our supply chain to understand their view of the impact of Brexit. Access to some skills may be restricted in the UK. Scarcity of labour in the sub-contract chain is a critical concern and one which we are watching closely.
In Ireland and the UK, there does appear to be evidence of a slowdown in investment decisions. We are working closely with our key clients to understand their concerns. Nonetheless, these concerns are having a knock-on impact in the construction industry as some projects, particularly in London, are being placed on hold whilst the investor group waits to see the outcome of the current discussions.
In the early days of Brexit, we had direct experience of investment funds from the US and Canada, which were reluctant to invest on a project in Ireland until they had clarity in what Brexit would mean. Thankfully the project went ahead with another source of investment. This concern of investors remains relevant today.
At Sisk, we have worked with external advisors understanding the impact of tariffs and customs in both Ireland and the UK. Consideration needs to be given by all parties to the importance of tariffs, VAT and working capital management. There will also be additional resources required by all businesses to manage the additional compliance requirements that all firms will face.
The implementation of tariffs will add costs to the end user. Depending on the route of the product to Ireland, there may be the imposition of double tariffs as the product comes from the continent to Ireland via the UK.
Regulatory divergence can add additional costs to construction projects. Certification is an area that we understand still needs to be worked through. Divergence will need to be understood in order that the additional costs on projects can be understood.
What impact could it have?
A key risk for Irish businesses is the value of sterling and what may happen in the event of a crash out. A rate close to parity should not be rolled out if the UK exits with no deal in October. This will cause competitive pressures to all that trade with the UK.
Brexit will result in more time being required for the completion of customs formalities and clearance. Project Programmes will need to take consideration of the impact of this. Inevitably, Brexit will impose costs and time on projects. We need to work closely with the clients and the supply chain to ensure that this impact is managed and minimised to the best
of our ability.
Brexit is, in our opinion, starting to weaken the EU on a global stage, and hence it is becoming a burden to the UK economy.
How do we think it may end up?
The mood of decision-makers in Ireland has shifted significantly to a 75% view of a ‘hard Brexit’ by default. This outcome will need urgent talks between all parties to ensure a safety blanket for the ROI/NI border.
Many businesses on both sides of the Irish Sea are preparing for this unfortunate outcome, however there is still hope that both sides can find a solution to the backstop issue.
A solution suggested in business circles is to have free trade on goods between the UK and Europe but services being by negotiation over future years. Product specifications would be aligned allowing simpler border controls, and products originating outside Europe would be bonded through the UK ‘land bridge’.
In our view, Brexit is now a damage-control exercise. We must avoid the glorification of Brexit. Brexit will be felt far beyond the October deadline — our expectation is that it will have long-reaching consequences for the next decade or so.
We must not allow a ‘hard Brexit’ to be triggeredby default. All must work together to ensure that this does not occur.
About John Sisk & Son
John Sisk & Son is an innovative, international, construction and engineering company. We are a progressive business with long-term vision, operating since 1859.
Sisk is Ireland’s no1 provider of construction services with extensive operations across Ireland, the United Kingdom and mainland Europe, employing approx. 1,400 people. Sisk has the track record, scale and capacity to successfully undertake large, complex, multidisciplinary programmes and we are recognised by our global clients as world leaders in safe delivery.
Based on a strong financial platform, Sisk’s strategy is to create value for our customers, partners and people through our technical knowledge, ability and experience to collaborate with our clients and suppliers to provide technical and delivery solutions in an open and can-do way to meet aligned objectives. We offer a full range of solutions where safety, innovation, quality, efficiency and value are integral to everything we do. We deliver projects and programmes in key sectors such as Data and Technology, Pharmaceutical and Life Sciences, Infrastructure, Transportation, Healthcare, Commercial, Residential, Retail, Industrial, Leisure, Education and Energy.
In Ireland, Sisk has recently completed the redevelopment project on The Curragh Racecourse in County Kildare and the tallest building in Dublin at Capital Dock. We are close to completion on the new Center Parcs in County Longford and we are building the major Grangegorman educational project for TU Dublin, as well as being active on a range of commercial, civil engineering and residential projects including social housing with our Sisk Living team.
In 2018 we completed a major redevelopment and restoration of London’s iconic Royal Academy of Arts, and we are involved in the major redevelopment at Wembley Park in London, the construction of the new International Convention Centre at Celtic Manor in Wales, a major city centre redevelopment project in Manchester at Circle Square, Birmingham’s tallest residential tower as well as a number of significant civil engineering projects across the UK.