Introducing the New Institute for Sustainable Trade

Patrick Daly:
Hello, this is Patrick Daily and welcome to Interlinks. Interlinks is a program about connections, international business, supply chains and globalization, and the effects these have had on our life, our work, and our travel over recent times. Today in the show we will be chatting with Simon McKeever, CEO of the Irish Exporters Association. The Irish Exporters Association or IEA, as it’s commonly known, plays a significant role in support of the exporting activities of all types of companies exporting from Ireland, and Simon and I discussed that in some detail previously on Interlinks back in 2019 in an episode that you can find in the podcast archive. Today, however, we’re going to be talking about something different, a new professional membership and education institute offering for professional development opportunities to international trade professionals, and it’s going to focus on preparing for a more sustainable future.
So this new body, the Institute of Sustainable Trade, or IST, has been conceived, developed, and launched this year by Simon and his team at the IEA. So welcome Simon, and thanks very much for being here with us again today.
Simon McKeever:
Thanks Patrick, and great to be back on the podcast again, and it seems like yesterday we’ve had COVID in the middle of all of this, haven’t we? And lots of things going on in the supply chain world.
Patrick Daly:
Exactly, so before we delve into kind of talking about the IST in some detail, I kind of wanted to get your thoughts on that. I checked the Interlinks Archive while I was preparing for today’s show, and the last time you were on was actually May, 2019, which is three and a half years ago now, and literally, a different world before we’d even heard of COVID or the Ukraine War, and all of that, so when you think back to that time now, how has the world changed for exporters operating in Ireland, and how has the strategy and the business of the IEA had to change to continue to support them effectively?
Simon McKeever:
Sure. Well I’d say when… I’m trying to remember back when we met then, but I’d say what was on the tip of my tongue all the time is probably Brexit and how Irish companies were preparing, and what state of preparedness we were at at that point, and I think we were either just about, I can’t remember, but we were doing a lot of training at that time, helping Irish companies get ready for Brexit as it is, and I think that was probably the single biggest blot on the horizon was Brexit at that point. It’s still there, but nowhere near the extent to what it was way back then. I mean, I think Ireland’s done a pretty good job in getting its companies ready for Brexit. We played a huge part in that. We were part of the delivery of basic customs training courses to a lot of the companies in Ireland.
It was a government led initiative, and look. There’s a huge demand for that type of training. It’s just a huge demand for our customs training, and of course, getting customs training just because of Brexit means you’re ready to trade with countries outside the EU as well, so it’s kind of tough for them. Since then, obviously we’ve had COVID, and we’re a small organization, so we were remotely working. I did wonder going into that what’s going to happen to the business because we’re a small organization, but we’d be very close to our members at both a professional and personal level, but you go into that as a small business going, “Will we come out of this?” But we did.
I think all of the different activities that we do, all of what really became very obvious to us that what’s very important to our members is our ability to talk on their behalf, whether that’s to government or the media, and that ability to be very close to the customers. And actually, it forced us to go digital, so this is the question you asked me. It forced us to go digital, and brought us into everybody’s living rooms, or home offices as it was at that time or into their factories because a lot of the manufacturing companies, well, they all stayed open. So we’ve moved into this semi blended world ever since then. I think dealing with COVID over the last two years, and we played a very active role as part of the infrastructure in Ireland.
It was a go between the companies and government to really help keep the country open, and then coming out of COVID, actually, we saw this boom in our members, so our members in terms of exports absolutely gangbusters, if I can use that phrase in your podcast.
Patrick Daly:
Yep.
Simon McKeever:
Very busy, very active, huge increase in sales all around the world, pent up demand all over the place. And of course, what has happened, and I think part of where we are with this inflationary spiral that we got ourselves into was in the shutting down of China going into COVID where you had a supply side shut down, a supply side shock to the global supply chain, shipping lines taking ships off in blank savings, which basically means to take ships off, and as COVID moved up through the world, up through Europe and then across the Atlantic, we saw that supply side shock coming into supply chains across the world, and then the total opposite when both China and the U.S.A. opened up fairly simultaneously, hoovering up all the containers, hoovering up all the shipping capacity, and that was the start of this global supply chain squeeze that has started this inflationary spiral that we’ve seen over the last 12.
So a big change from a supply chain point of view for our members is just in time. Is it even just in time anywhere? That’s kind of a lot of that’s gone out of the window, unless you’re very large and very powerful, and have enormous global buying power, but for your smaller, medium-sized even large companies, they’re buying what they can and storing it, and so you know, you have this clogging of… So it has eased up quite a bit now as the China zero COVID policy has taken a bit of demand out of the system. A concern I would have for smaller companies, and I’m sure it’s the same all around the western world, is smaller companies have been hoovering up inventory and storing it, and sticking it in a warehouse.
Patrick Daly:
Yeah. There’s pressure on warehouses all over the place, not just here, but in continental Europe and the U.S. all over, I’m hearing it.
Simon McKeever:
Yeah. A bigger concern would be the amount of working capital that some of these medium to smaller-sized companies would have tied up in-
Patrick Daly:
Yeah. Some are a little worried that they have maybe the wrong stuff tied up and they haven’t got the stuff they’re actually going to need, so some are a bit worried about what they have.
Simon McKeever:
Yeah, so going into a recession globally, where does that leave some of those kind of companies? And look. There’s a range of supports which the Irish government has brought out, which with a bit of tweaking I think will certainly help companies going forward, so we’ve had the kind of supply chain squeeze, then the war in Ukraine has exacerbated what had already been spiraling in fossil fuel costs let out again from a huge increase in demand when China reopened up again. So if you ask me what’s the Brexit of now for Irish companies, it’s energy costs is the biggest thing they’re trying to get their head about. It’s using up an awful lot of time management time in companies. How are they going to deal with these energy costs, and the inevitable spiral in wage costs of that will cause I think as we tip into next year.
I think there’s a big route going on at the moment because the E.U. has agreed a 7% increase in pay for all the public servants over there, and so they’re getting 7%. There’s going to be wage demands coming into European and U.S. economies, I would have thought. Certainly members are saying to us, “We’re expecting a huge increase in wage demands in the first quarter of next year. How are we going to deal with that?”
Patrick Daly:
And with a tight labor market, it’s going to be hard to hold out against those demands, isn’t it?
Simon McKeever:
Well, yeah. That’s the bizarre thing about this recession is particularly if you look at the U.S. and here. There is still the labor force numbers are still very, very strong despite increased interest rates.
Patrick Daly:
Yeah. When we think back to the recessions that we lived through in the 1980s and we’d 18 and 19% unemployment, it’s just not like that. It’s very different, isn’t it?
Simon McKeever:
Yeah. It’s smaller numbers, except for you have pretty high inflation now at the moment, but my sense is that we’ve seen a bit of a peak in the energy costs, a peak in the marginal energy costs, so gas at the moment. I think we’ve seen a bit of the peak in that, and in some of the oil price at the moment, which we’ve got a milder start to the winter season and it’s very mild today. Whilst walking outside with a coat on, I had to take it off and look. It looks like Europe has a decent amount of gas stored to get us through the winter. There’ll be questions about what happens I think going into next winter if the war in Ukraine is still going on at that point. So I think we have a very vibrant exporting economy in this country, and the great thing about the Irish economy is that it is a wide open global economy trading all over the world.
So when we have shocks at home, if our markets are doing reasonably well, then we tend to be okay. The downside of that is that one of our very large markets is having a problem, then that might affect us as well, but there’s a huge amount of U.S. investment in Ireland, and there is huge demand linked from those companies in a lot of supply chain activities items going back across the Atlantic Ocean, so we may have a recession. I’m not quite sure it’s going to be as severe as it will be in continental Europe or particularly in the United Kingdom. I think they’re about to get very bad.
Patrick Daly:
I think about nine quarters of recession, apparently, is what I heard.
Simon McKeever:
That’s a very, very, very grim assessment by the Bank of England last week.
Patrick Daly:
That’s over two years. That’s a long, long recession. Yeah.
Simon McKeever:
I think what they’re saying is it’s a year and a half of recession, and it’ll take them a year and a half of it to fully come out of it, but I don’t think if they… I don’t know if they will come out that quickly. I think the disguised elephant in the corner of the room in number 10 Downing Street is Brexit still, actually. They haven’t-
Patrick Daly:
Nobody wants to make an honest assessment in the U.K. of the effects of Brexit. It’s all kind of still a bit taboo, isn’t it?
Simon McKeever:
Well, they haven’t dealt with it. They haven’t dealt with it. They haven’t dealt with the fact that they’ve divorced themselves from their nearest and biggest trading partner, and that the effects of that is going to have on the economy over time, so I think… So the U.S., the E.U. and the U.K., we’re all facing the same pressures in terms of an inflationary spiral, a supply chain spiral, the effects of the war in Ukraine on all the countries, but the U.K., and sorry, if you look at the actions of the relative central banks, the Fed, the ECB and the Bank of England, their most recent rate hikes were all three quarters of a percent, and all have now signaled that the next one, even though one of the Fed presidents, I think Powell, has poo-pooed this, but they’re all suggesting the next one will probably be half a percent.
And the particular danger for Europe is that the Ukraine war is in its back garden. So when you look at political and economic risk, I was doing a radio piece last week on euro sterling, when you look at… and I used to trade currencies years ago,. When you look at the euro sterling rate, you’ve got political and economic risk in both territories, so what’s the political and economic risk in the U.K.? Well, we’ve seen the political madness that they’ve gone through over the last while. Hopefully, that’s setting down. The economic risk in the U.K. I don’t think they’ve factored in, is Brexit is going to weaken the economy anyway in an economy that hasn’t really shown any growth for the last 20 years, so then on the other side, political risk in Europe it’s probably more stable, but the economic risk, you have a war going on in a country that backs onto…
That is a threat there, so I think that that’ll keep that rate extremely volatile, and for Ireland, the U.K. remains an extremely important market for us. You mustn’t forget that.
Patrick Daly:
Especially for some sectors more so than others.
Speaker 3:
93.9 Dublin, South FM.
Patrick Daly:
This Institute of Sustainable Trade, so tell me then, what is it, and what are its objectives?
Simon McKeever:
So I think you called it out there at the start of your program, the Institute Sustainable Trade. It’s a professional membership and education institute that we’ve set up to offer education, networking, and professional development opportunities to international trade professional, and that’s a great thing to say, but what is it going to do? There’s three core pillars; sustainability, international trade and leadership, and really what it’s all about is getting the individuals who work in our industry so that individuals in companies or who are aspiring to work in our industry at all levels ready to meet the challenges of sustainability and by default getting the companies that they’re working for ready and our industry ready.
We talked about Brexit at the start of your podcast, and we talked about 2019, it was what we were talking about, and I suppose when I look at what our companies are facing, I go back to Brexit and I went, so back in 2016 we started developing all these training courses because we knew Brexit was going be a major pain and a major issue for our members to deal with. So sustainability is going to be a major issue for our companies, and the people who work in the industry to deal with. When we listed through what are companies thinking about now as opposed to back in 2019, you didn’t hear me saying sustainability.
So it’s still somewhere in the future, and you know will hear a lot of companies talking about everything that they’ve done in sustainability, and there is some really successful initiatives going on, but in our industry, when you talk about global supply chains of which we are very, very part of, sustainability is a big, big issue. There is legislation coming out in Europe, which will really begin to hit at the start of next year around sustainable finance, and it will force banks and insurance companies and people who are investing so larger companies as well to act in certain ways. They will need to be able to demonstrate things like that. How are they emitting against climate change? How are they going to run their business so that they use water more sustainably?
That’ll come in 2023. How do we transition to towards a more circular economy, preventing waste and recycling? How do we protect different ecosystems? So that’s coming into the financial system, and they would have to show that they’re not just green washing in relation to-
Patrick Daly:
Because otherwise they’re not going to get funded for projects and stuff like that. Isn’t that the essence of that?
Simon McKeever:
But they won’t-
Patrick Daly:
It really has teeth.
Simon McKeever:
But it really has teeth, and actually the money’s going to drive an awful lot of this because if there isn’t money to invest in things, and if… It’s like in any supply chain. There’s a supply chain of money. Isn’t there? So it’s the bigger companies that are procuring stuff of smaller companies that eventually bring in the legislative change that happens, so by nobbling the banks, and the financial system to be better at sustainability, and I haven’t used the word green, except for now. I’m not talking just about greening. We’re talking about human rights is a huge issue in supply chains, so by forcing the way the money has been put together and then transmitted into companies will actually filter down into smaller companies, so that’s the E.U. taxonomy.
That will hit the financial institutions, and then will hit the larger companies in ’26 and then filter down into smaller companies at different times, and then-
Patrick Daly:
That’s why sustainable is in the title of this new institute for all those reasons.
Simon McKeever:
That’s why sustainable because I look at what’s the biggest problem our companies are going to face? What’s the biggest challenge? Actually, I said problem. Problem’s not the right word. Challenge, but it’s also an opportunity, I guess. It’s an opportunity for companies to steal a march, get ready for it, reconfigure themselves, rebrand themselves as long as they have the credentials sitting in underneath it, and we want to help companies get ready for that. Just like we have companies get ready for Brexit, we want to help companies get ready for this, but the other piece in all of this is that we recognize in our industry that it could do with being a professional type of career for people.
You look at the accountants. You look at the bankers. You look at the compliance officers, the lawyers. There’s a set of standards in that and there’s loads of different standards for different types of work in our organization, but what we’re looking to do is leaning on the legislation that’s been about to be brought in sustainability, helping people with their careers, so how do you define a career path in our industry for all levels?
Patrick Daly:
On the educational front end, what’s the offering, and how do you see these offerings, and those qualifications evolving in future years?
Simon McKeever:
So the initial offering is to have two designations, so these would be at your… I was going to say professional level, but professional and manager level, so the initial offering is to be a sustainable trade professional or manager, which you will need to set a set of exams to achieve it, so there’s either six or eight modules, and you’ll need to have a certain level of experience and qualification already. When I say qualification a degree or there is also a way of grandfathering people in, but people there is pain involved in it. They will need to attend six virtual classes, a sit-in exam, and there’s an annual membership fee, so you need to pay your membership fee and your membership fee is €300, and you need to sit six papers or €150, and then what we offer then afterwards is CPD to keep you up to speed with what needs to go on and there will be a chance then.
We’re looking at we have part of a level six. So for your Irish listeners they probably know what a level six program is. It’s just below kind of an undergraduate degree level, and we’re looking at targeting the people who are doing the job of international trade in a business, so they might be involved in the supply chain piece of it. They might be involved in spare parts part of the business, but they’re ordering items overseas, so we are a level six program. We’ve already got our certificate in international trade. We will develop a certificate in sustainability, and a certificate in leadership, and then we’re also working with two of the universities in Ireland, and with Arizona State University in America, but we’re very specifically working with a technical University in Dublin to work with us developing level nine programs as well, so level nine being at master’s level.
So the vision of the organization is that this is where people go to know the standards that are required in our industry to learn about sustainability, international trade, and leadership and to have a chassis to fit their career in and around, and look. We’ve talked to some of the logistics companies, so the designations are people working in the international trade business, but what about drivers? What about machine operationists? What about people who are working on the floor? So when we talk to the logistics companies, they go, “Gosh. I’ve got some really good people. They might be driving HGV or they might be working on the floor. How do I identify those people that I want to bring from the floor up through the structure of the organization?
Patrick Daly:
It’s interesting. This is aimed at individual professionals as opposed to say the Irish Exporters Association, which is aimed at businesses, so it’s a different-
Simon McKeever:
It’s a very different animal, so IEA’S membership is the company, and Patrick, you know, our members are a bit of everything, so predominantly manufacturing companies. That’s the history of the organization and the logistics companies that serve them, so the IEA sweet spot is, “How do you make the thing? How do you put the thing in the box, and how do you get it on and off the island?” So it’s really in that supply chain territory, and so the IST is absolutely focused on the individual and how do you help and support that individual to grow during their career? So it’s a professional body. A lot of the education will be… So the IST stroke IEA will provide a lot of the practical training, so we’re pretty good when a company goes to us and I need to train six people up in… like we’ve just had a request in from a company who need to train people up on letters of credit.
So it’s a very specific course to do a very specific operational piece in the business, and we’re pretty good at being able to work with individual trainers to deliver that very specific piece. Our whole suite of customs training is all about that. Our certificate of international trade is now accredited by the Technical University of Dublin, TUD at level six, but it’s very much people go on that course are able to go back into their workplace afterwards and save thousands because of the stuff that they’ve learned. So there will be still that level of very practical hands-on training that the IST will provide in the way that we do through the IEA at the moment, but we will work with third-level education partners to bring forward a lot of the education that would be on the framework. We do have a suite of practical sustainable training that we offer as well, which is very hands on.
Patrick Daly:
And the relationship then between the IEA and the IST, what is it and how do they compliment each other?
Simon McKeever:
So the IST is a division of the IEA, so the institute is a division of the IEA. It’s something that we are growing, and they will compliment each other in that the IEA will continue to represent the industry on all the various different stakeholder groups that we’re involved in, so it has a voice as will the IST, so the institute will have a voice at the major pieces of legislation that are being developed, so we will continue to be a lobby group. We’ll now just have a bigger ax to grind on behalf of both our companies and our individual members to be able to truly represent them, so we will represent them as well. So the relationship is it’s a division of the IEA.
Patrick Daly:
So looking to the future, and this kind of environment of high inflation, you mentioned earlier and rising interest rates. What do you think now are the major concerns for Irish companies that trade import and export internationally looking out into the future?
Simon McKeever:
Not to move away from sustainability, they know that sustainability is there. It’s bubbling away, but they will wait. I think they will wait until there’s a gun put to their head before they go and do something about it just because they’re preoccupied with everything else, so a bit like Brexit. It took the hard deadline of the U.K. saying, “We’re doing this on the 1st of January, 2021 to cause companies really to start to take action on that.” My sense is that there is a legislative framework which has been brought in by Europe, some of which has started this year, but will really begin to kick in next year. As we move through next year and into 2024, people will have to do something about that, so part of our role will be to have a fairly high visible campaign through webinars and that to get this out to people, so they need to understand that.
So I think that’s going to be bubbling away in the background, and it will be our role to bring that to the foreign companies so that they get to understand it. The big thing for them at the moment is still how are they going to deal with energy? How are they going to deal with wages? Another big issue in Ireland is can they find housing for their workforce?
Patrick Daly:
So now as we come into the final minute or so, are you reading or listening to anything lately that you find particularly inspiring that you’d recommend to our listeners?
Simon McKeever:
You know what? I’ve trying to read a whole lot of books I should have read as a child.
Patrick Daly:
The Tale of Two Cities and all that kind-
Simon McKeever:
Do you know what? The last book I read was The Great Gatsby, believe it or not. That’s the last book I read. I’m trying to read Catch 22, which is I’m finding a terrible struggle.
Patrick Daly:
Yeah. I did try that as well. It’s difficult.
Simon McKeever:
It’s very difficult. It’s just a particular… Empire of the Sun, J.G. Ballard’s book. I read that again. It’s slightly difficult, but I’ve just read Ben McIntyre’s book. Have you read that one?
Patrick Daly:
No, I haven’t.
Simon McKeever:
It’s a great book. It kind of dispels the kind of myth that Pat Reid, who is the original kind of writer of the COVID’s myth that it was all stiff upper lip and jolly hockey sticks. This is Ben McIntyre portrays it as a pretty miserable place to be. I read that. What else did I read? The Splendid and the Damned. I like World War II books, the Splendid and The Damned, which is Eric Larson’s book. It deals with Churchill’s first year as Prime Minister. That’s a fantastic book. What else have I read? The North Water. I tell you what I’ve stored away to read at Christmas is The Border by Don Winslow. Have you read any of his stuff?
Patrick Daly:
No, haven’t. No.
Simon McKeever:
It’s just so fantastic, so if you want to read, there’s a trilogy of books that he has called The Power of the Dog, The Cartel, and the Border is the One, and I read the other two a few years ago. In fact, I read The Cartel First because I picked it up in a bookshop at an airport and it’s the second one. I then bought the Power of the Dog, read that, read the Cartel again, and it’s all to do with the Mexican drug wars with the Dog there, but it’s just fantastic. They’re just fantastic books.
Patrick Daly:
Some great recommendations there.
Simon McKeever:
Yeah.
Patrick Daly:
Unfortunately, we’ve been beaten by the clock again, so many thanks Simon for being here with this again today. It’s been a pleasure as always.
Simon McKeever:
Thank you Pat, and best of luck with the podcast, and it’s probably too early to say Happy Christmas, isn’t it?
Patrick Daly:
Maybe a little bit, but-
Simon McKeever:
We normally try to have a lunch before Christmas.
Patrick Daly:
Definitely, so thanks also to our listeners for tuning in again today, and be aware that if you enjoy this episode, you can find a full series of over 100 episodes of Interlinks on Spotify, Apple Podcast, Acast, and other major podcast platforms, so until next time, keep well and stay safe.