While the UK flounders, we must think long term

A slow drumbeat of bad news is emanating from Japanese corporations about their significant presence in the UK.

While some, including company owners, are at pains to say this has nothing to do with Brexit if it walks like a duck and talks like a duck it is usually a duck. There has to be an element of Brexit that weighs on decisions.

Honda has announced the closure of its major plant in Swindon, the first factory closure by the Japanese car manufacturer in 71 years. Toyota has warned that its UK plant will close for weeks in a no-deal Brexit scenario.

Earlier, a story surfaced that Japanese diplomats briefly considered cancelling a UK-Japan summit over wording written in a British government letter about opening trade talks after Brexit.

Last month, the giant Japanese conglomerate Hitachi cancelled plans for a £16bn nuclear plant in Wales.

Rarely have we witnessed such a plethora of announcements by Japanese companies focused on one country. Do you really have to wonder why?

Politicians and policymakers often think that private enterprise is some form of free-wheeling buccaneering endeavour that can be bounced around with short-term agendas. The truth is somewhat more problematic.

Many corporations, especially large multinational ones, deploy large amounts of financial capital to build and operate factories and offices that support multi-decade strategies.

When you are investing billions of dollars or euros or pounds the horizon stretches way beyond ones that inhabit the minds of politicians.

It is critical for any country that values long-term investment of this type to understand what makes decision makers in industrial enterprises tick.

Surety, the absence of knee-jerk responses and long-term commitments are all hallmarks of good planning.

This is where Ireland is scoring heavily at present. Its resistance to calls to leave the euro after the global financial crisis, staying true to its pro-business philosophy and underlining its commitment to the single European market are all paying off now.

Evidence of that is crystal clear from the string of announcements made over the past year about international companies establishing themselves in Ireland as a platform to serve European markets.

Thousands of jobs have been announced by companies that are at the leading edge of business development globally.

These are found, primarily, in technology-centric markets and include software, medical technology and web-based services companies that are scaling at a dramatic rate.

A salutory lesson about long-term planning by any Government can be learned from examining how Japanese industry’s relationship with the UK has unfolded.

Having trusted the UK authorities since the 1970s to be at the heart of Europe, Japan’s leading companies invested heavily in people, plants and equipment in the UK.

It was the Japanese who also pioneered just-in-time (JIT) systems that drove hyper-efficiency in large manufacturing programmes, allowing companies operate across borders because they could move goods and people quickly in response to customer demand.

The combination of UK-based factories and JIT allowed the Japanese and others create pan-European enterprises that competed effectively with global competitors including the US and China.

While the UK flounders amid its self-inflicted Brexit calamity, Ireland must keep its long-term planning for inward investment on course.

The ground-breaking for the second runway at Dublin Airport last week is just one example.

By investing in future infrastructural capacity like that, Ireland can build the platform needed to attract and retain long-term investment.

It may not be beyond the imagination, in this context, to see more Japanese corporations choosing to select Ireland as an alternative English-speaking base to fulfil their European ambitions.

We should do all in our power to encourage such thinking.

Joe Gill is director of origination and corporate broking with Goodbody Stockbrokers, His views are personal.

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