Survey of business links on the Island of Ireland

Published: 2005

EXECUTIVE SUMMARY

This report provides an overview of the extent, nature and intensity of cross-border business linkages among relevant companies in 2002. These links took many different forms. In some instances, they were formal business linkages, including sourcing of raw materials, exports, imports, etc. In others, they were of a more informal or unstructured nature, such as visits to production facilities, exchange of information, etc.

Export Links

In Table 1.1 a summary of the incidence and intensity of export activity is outlined. The table shows that approximately 601 per cent of companies in both jurisdictions operated only within their respective domestic market with no export activity at all. A further 13 per cent of companies in Ireland were engaged in export business but not with their counterparts in the other jurisdiction. In Northern Ireland only 3 per cent of relevant companies were engaged in export activity without having any exports going to Ireland. This means that a total of 28 per cent of companies in Ireland were engaged in some level of export activity to Northern Ireland, while 34 per cent of companies in Northern Ireland were engaged in some degree of export activity to
Ireland. The figures would also seem to indicate that companies located in Northern Ireland were more highly dependent on the southern market for their sales than were their counterparts, located in Ireland, on the Northern Ireland market. It is clear that only very small percentages of companies in each jurisdiction rely on the market in the other part of the island for 50 per cent or more of their sales. 

TABLE 1.1 INCIDENCE AND INTENSITY OF CROSS-BORDER EXPORT ACTIVITY

Source: InterTradeIreland/ESRI survey, 2003

Figure 1.1 (see page 12 on full report) presents details on trends in export activity to the other jurisdiction over recent years. The results are somewhat mixed. Up to 22 per cent of companies located in Northern Ireland recorded that their level of exports to Ireland had fallen from 2001-2003. The comparable figure for companies located in Ireland is 18 per cent. In contrast, however, a higher percentage of companies located in Northern Ireland say that their export levels had increased from 2001-2003 – 39 per cent among Northern Ireland companies compared with 32 per cent among companies in Ireland.

In assessing the strength or intensity of an export business linkage, it must be considered whether or not the business in question is part of a regular, ongoing link; an occasional link; or a ‘once-off’ transaction. Clearly, the higher the percentage of companies which regard their export business to the other jurisdiction as being part of a regular, ongoing link the stronger is the business relationship between the two jurisdictions. In the course of the survey, respondents who recorded having exported to the other jurisdiction in the preceding 12 months were asked to record whether the export business in question was part of a regular, ongoing link, an occasional link or a ‘once-off’ transaction. Figure 1.2 (see page 13 on full report)  shows that approximately 70 per cent of companies from both jurisdictions that exported to the other part of the island regarded the relevant export business as being part of a regular, ongoing linkage. Relatively small percentages regarded it as being a ‘once-off’ transaction – 4 per cent of relevant companies in the South and 6 per cent of those in the North. In interpreting the figures, it should be borne in mind that the data relates only to the subset of companies that did actually export to the other jurisdiction at some point in 2002.  

Import Links

A further aspect of cross-border business linkages is the incidence of importing activity from the other jurisdiction. Table 1.2 outlines the incidence of importing activity and also the extent and intensity of cross-border imports. 47 per cent of companies located in Ireland and 63 per cent of those in Northern Ireland recorded that they did not import any goods or services from outside their domestic market. A total of 33 per cent of companies in Ireland recorded that although they imported goods or services, they did not import anything from Northern Ireland. This leaves a total of just over 20 per cent of companies in Ireland which recorded having imported from Northern Ireland. In contrast, just over 10 per cent of companies located in Northern Ireland recorded importing goods or services from outside the jurisdiction but not from Ireland.

Overall, therefore, it would appear that a substantially smaller percentage of companies in Northern Ireland than in Ireland recorded having any imports from outside their domestic market. A higher proportion of companies in the North, however, recorded having imports from the other jurisdiction than do their counterparts located in the South.

TABLE 1.2 INCIDENCE OF IMPORTING AMONG COMPANIES IN BOTH JURISDICTIONS

Source: InterTradeIreland/ESRI survey, 2003

Details on recent trends in import levels from the other jurisdiction are outlined in Figure 1.3 (see page 14 on full report) which shows that 32 per cent of companies located in Ireland recorded the level of imports from Northern Ireland to have increased from 2001-2003; 53 per cent recorded that they remained constant, and the remaining 15 per cent recorded that they had decreased. In contrast, it was found that among companies 13 in Northern Ireland a higher percentage recorded that import levels have increased (41 per cent).

As a measure of the strength of the linkage represented by import activity from the other part of the island, Figure 1.4 (see page 14 on full report) presents details on the percentage of companies that considered this to be part of a regular, ongoing link; an occasional link; or a
‘once-off’ transaction. A substantial majority of companies in both jurisdictions, which import from the other part of the island, describe the relevant business relationship as being a regular, ongoing link – 76 per cent of companies in Ireland and 81 per cent of those in Northern Ireland. Only very small percentages (of the order of 2-4 per cent) described this relationship as being of a ‘once-off’ nature.  

Other Formal Business Links

In addition to export and import links, this report illustrates other formal business links that exist between companies in Northern Ireland and Ireland, such as joint purchasing and marketing or co-operative staff training. The results are shown in Table 1.3 (see page 15 on full report).  A total of 15 per cent of companies in Ireland recorded having participated in some form of group purchasing activity with another enterprise, which could have been located in Ireland, Northern Ireland or elsewhere in the world. The comparable figure for companies located in Northern Ireland was 18 per cent. The table also outlines the percentage of companies which participated in these joint business activities within enterprises located in the other jurisdiction. Highlighted under purchasing of services and materials or equipment figures, is that 3 per cent of all companies in Ireland co-operated with companies in Northern Ireland in this form of business activity. The comparable figure for companies located in the North was 6 per cent. It is clear that a higher percentage of companies located in Northern Ireland participated in all 8 types of joint activities with their counterparts across the border than was the case among companies located in Ireland. 

Informal Links

Besides formal business links, the report outlines any informal links that may exist between companies, North and South in 2002, such as general business meetings, visits to production facilities or offices, dinners/lunches with senior executives to discuss business, etc. To get a measure of additional business contact or networking not yet covered in the survey, those companies that had recorded more formal cross-border business links were excluded from this part of the analysis. As a result, it was found that 7 per cent of companies located in Ireland recorded having participated in informal business activity in 2002. The comparable figure for Northern Ireland was 4 per cent.

Aggregate Business Links

Table 1.4 (see page 16 on full report) summarises the cross-border business links that exist on the island of Ireland. Cross-border export and import links referred to in the table are self-explanatory. The formal business co-operation refers to the 8 business links outlined in Table 1.3 ranging from joint purchase of raw materials, services or equipment to co-operative links in producing companies’ output. The informal links refer to informal visits to plants, offices, business lunches, and so on – general networking activity outside the scope of direct formal business activity.

The figures show that less than one half of companies in both jurisdictions had no business linkage with their counterparts in the other jurisdiction. The most important linkages were clearly import or export linkages (with or without some combination of the other linkages outlined.) Informal linkages only, were more characteristic of companies located in Ireland than in Northern Ireland (7 per cent compared with 4 per cent respectively). In contrast, formal business co-operative activities with enterprises in the other jurisdiction were a much more commonly occurring phenomenon among companies in Northern Ireland than in Ireland.