15 th /16 th February 2018

1. Addressing the Skills Needs Arising from the Potential Trade Implications of BrexitExpert Group on Future Skills Needs Workshops 15th/16th February 2018

2. Expert Group on Future Skills Needs • Independent, non-statutory body, established in 1997 • Includes representatives from business, education and training providers, trade unions and a small number of Government departments and agencies • Secretariat based in Department of Business, Enterprise and Innovation • Advises the Government on future skills requirements and associated labour market issues, that impact on national potential for employment growth • Undertakes research, analysis and horizon scanning in relation to emerging skills requirements at thematic and sector levels • Engages with Department of Education and Skills, Higher Education Authority and SOLAS and other relevant bodies to produce an agreed action plan to address the skills needs identified

3. Context of workshop- 1 https://dbei.gov.ie/en/Publications/Building-Stronger-Business-Responding-to-Brexit-by-competing-innovating-and-trading.html • Contingency planning for potential fallout from Brexit- DBEI focus on helping firms to compete, innovate and trade in post-Brexit environment • Range of DBEI research directed towards understanding Brexit- establishing the evidence base • Purpose of study- to examine whether Irish based enterprise is adequately equipped from a skills perspective to address the potential trade challenges posed by Brexit

4. Context of workshop- 2 • (1) UK departure from Single Market and Customs Union- could bring new border controls, barriers, resulting administrative/technical requirements for Irish trade into and from UK market • Also questions around continued viability of UK landbridge as channel for Irish trade • Impact on efficiency of trade flows, creating disruption, additional business costs, impacting on supply chains • Freight Transport, Distribution and Logistics sector- key enabler of trade for Irish based enterprise • (2) Also onus on diversification of Irish trade away from UK market to offset potential impacts • Seeking out non-traditional markets may present other trade related barriers and regulatory challenges for Irish based enterprise

5. Revisiting of previous EGFSN reports (trade related skillsets) • 2012’s Key Skills for Enterprise to Trade Internationally • Focus on skills related to global/international management, sales, marketing, customer support, design and development, logistics/distribution, foreign languages/cultural awareness (i.e. trade diversification skillsets) • 2015’s Addressing the Demand for Skills in the Freight Transport, Distribution and Logistics Sector, 2015-2020 • Focus on skills related to Freight Transport/Logistics (especially HGV driver shortage), trade compliance, Supply Chain Management (i.e. trade facilitation skillsets)

6. Current Exercise- 1 • Through current study- assess the progress, through development of an adequate skills base, in implementing the key recommendations of those reports, prepared at a time of less potential for restrictive, complex and disruptive trading arrangements with a key market and channel for Irish trade • What other issues have arisen? • e.g. Enhanced provision and programmes in international management/sales/marketing/supply chain management, introduction of foreign languages strategy, professionalization and enhanced attraction of FTDL sector as a career option (e.g. development of apprenticeship programmes for HGV drivers, Logistics, enhancement of training for Customs Clearance/Freight Forwarding)

7. Current Exercise- 2 • Undertaking of comprehensive research exercise in current study (engagement with enterprise sector) • Stocktake and update these two reports, establish exact state of readiness of Irish based enterprise from a skills and competency perspective • Expected outcome of study: preparation of an evidence based action plan that can be drawn upon and implemented • Contribute towards development of the trade related skills base in Ireland, and its accessibility to enterprise, in a manner that: • Helps Irish based enterprise navigate the potentially more complex and diverse trading environment post-Brexit • Enhances the efficiency of trade flows, competitiveness and diversification into new markets • Helps to grow and sustain employment

8. Qualitative Research- Study Sample • Engaged with 64 internationally trading enterprises and firms within the wider Freight Transport, Distribution and Logistics sector, including key informants relevant to both areas, to determine: • the potential impact of Brexit on their business • their existing and prospective trade related skills needs • how these needs could best be addressed • Internationally trading enterprises concentrated in sectors identified by Government Trade Strategy (Ireland Connected) as ‘sectors of comparative advantage’ for Ireland- in particular Agri-Food, Health Lifesciences, Technology, High Value Manufacturing, Construction Services • FTDL firms- included Third Party Logistics Providers, International Road Freight Transport Companies, Consultancy Firms providing Logistics Services as significant part of their business activity, Operators involved in intermodality and co-modality logistics activities

9. Purpose of Workshops • One of two identical workshops being held this week- one in Dublin and one in Cork • Key role in qualitative research phase • Gather together Internationally Trading/FTDL stakeholders from industry, policy and research • Main goals: • To discuss and validate the preliminary results of the study • To discuss the potential impacts of the key findings • To brainstorm and discuss the measures that should be taken in order to boost the availability of the relevant trade related skillsets in Ireland

10. Workshop Agenda

11. International Traders

12. Findings – International Traders • Spoken to organisations across Construction, Agrifood, Technology, High Value Manufacturing, Health Lifesciences • Key informants • Reviewed Brexit specific documents, reports, policy statements, impact studies, articles etc • Changes in skills requirements • Particular challenges of Brexit (broken down by sector) • Planned mitigation and suggestions for support from Govt and training and education providers

13. Approach – International Traders Telephone Interviews • Size of the organisation • Revenues across key markets • Customs skills • How transport goods • Impact on business and subsequent changes to MO • Changes in ability to recruit • Support

14. Agri-food Sector Profile • Wide range of activities • Rapidly growing global population and changes in consumer preferences due to a burgeoning middle-class in emerging markets • The retail of agri-food produce is dominated by a small number of large retailers • Highly dependent upon the export market

15. Agri-food • Integrated UK&I manufacturing (e.g. packaged) • Time to market is a critical factor • Places limitations on the geographical reach of certain products • Market where Brexit has already been seen to have an impact (currency) • Small companies less likely to have awareness of non-tariff barriers as they tend to depend on outsourcing logistics

16. Agri-food Identified Skills requirements • Customs: H&S, TARIC • Regulatory Divergence: Tailoring products to reflect specific market regulations. • Supply Chain Auditing • Sourcing • Trade Financing: Managing VAT • Languages: Translation, business, N.A. + Asia: French, Mandarin • Cultural: non-verbal communication and awareness. • Food Scientists/Meat technicians

17. Agri-food Feedback • Northern Ireland a key market and seamless supply chain with Ireland – Big shock • Difficulties reported in exporting to 3rd countries • Larger organisation – more proactive • Suggestion that less business will be done with UK • Big challenges with exploiting new markets • UK a unique market (e.g. Cheddar)

18. Technology Sector Profile • Can be subdivided into three sub-sectors: • Software Products and Services • Electronics, Hardware and Firmware, • IT-Related Services • Software increasingly cloud based • Much hardware production has moved abroad • …but not Supply Chain Management functions

19. Technology Sector Profile • Products often air freighted as high value • Dangerous goods • Larger multinationals have dedicated global trading teams • Smaller organisations likely to use 3PL • Concerns over regulatory divergence

20. Construction Sector Profile • Composed of companies producing physical goods, and support services • Products include timber products, building systems, insulation products and fittings • Demand for construction products and services is anticipated to shift toward South-East Asia and other developing markets • Worries that there is an oversupply of offices in Dublin • 55% of Ireland’s timber and construction sectors’ exports to UK

21. Construction Sector Profile • Construction output is currently estimated to be at 2001 levels, employing over 140,000 people • Grappling with sourcing adequate levels of trades/ professions to fill important vacancies • Number one issue lack of skilled tradespeople • Apprenticeship uptake low • Brexit may increase demand for office space in Dublin • …but has created uncertainty

22. Health Lifesciences Sector Profile • Latest contributor to corporation tax receipts in the goods sector • Highest level of profit per employee • Ireland is a globally recognised centre of excellence • Employs over 50,000 people directly and exports over €445 billion annually

23. Health Lifesciences Sector Profile • High margin and time sensitive – air freight • Engaging partners to explore alternative arrangements and tackle regulatory divergence/requirements • Less exposed to UK market than other sectors • Limited availability of cold chain storage

24. High Value Manufacturing Sector Profile and findings • Ireland provides a competitive high value manufacturing location • Likely to undergo significant disruption over the next number of years due to the development of new technologies • Often multinationals with SCM centres in Ireland • Varying levels of exposure to UK market • Data Analysts and supply chain specialists

25. FTDL Sector Sector Profile

26. Finding – Roles difficult to recruit into • Drivers, drivers, drivers! • Supply Chain Management roles • Operations • Sales and Marketing • Customs Clearance • Not just bodies through the door – quality • Consistent with 2015 findings • Perception of sector • Turnover

27. Exposure to UK market • Mixed response to survey • Those most exposed to UK looking at other markets (EU predominantly) • Multinationals less exposed, but concerned

28. Impact of Hard Brexit • “Very negative impact” • “Minimal at the moment” • “Unsure” • “positive…customs clearance expertise is likely to become more in demand” • “Will materially we change the way do business” • Very negative impact – company is shutting down and Brexit is a major factor in this • Exposed to landbridge • UK/Ireland regulatory alignment

29. Change in import and export markets? • Look to explore other European markets • Adapt • “Wait and see” • Little evidence that markets further afield are being explored/considered • Costs associated with training/recruitment/exploring new markets

30. Staffing numbers and training requirements • Modest increases reported amongst some respondents • Generally in relation to customs clearance • INCO terms/AEO • FTDL sector not significant employers of British workers in Ireland

31. FDTL Findings • Chinese walls effect • Legal issues potential for disrupting distribution rights for UK and Ireland • Exposed to UK market and landbridge • Feeling that Hard Brexit would be extremely difficult… • …but don’t believe it will happen • Uncertainty a huge issue • Acknowledgment that customs clearance expertise was needed • But not currently investing in upskilling/recruitment/alternative markets • Wait and see!

32. Overarching Findings • Varying level of concern and projected impact • Not consistent across sector, size of organization and exposure to UK • Uncertainty affecting understanding of impact and skills requirements • Little evidence of intervention by majority of respondents to upskill or invest in new markets • General ability to recruit has got more difficult

33. Overarching Findings • Larger organisations better placed to cope with new customs requirements (existing markets, dedicated trading teams) • Few mentioned divergent regulatory environment • UK employees generally very small proportion of overall workforce • Language skills discussed, but intertwined with cultural awareness • Europe rather than other markets cited as replacement

34. Breakout 1: Validation of Study Findings

35. Breakout 2: Potential Measures

36. Wrap up and Conclusions