Exporting companies facing ‘ruin’

MANY Irish exporting companies are facing potential ruin as they find it harder to get credit insurance cover, according to the Irish Exporters’ Association (IEA).

Approximately €9 billion worth of Irish exports are covered by credit insurance on a rolling six-month basis, with a further €10bn worth of home-based trading covered.

The IEA says that exporters have now reached crisis point in their cashflow management as credit insurance underwriters have cancelled or reduced cover to companies and the move is adversely affecting the supply of locally produced goods and services to exporting companies.

The IEA yesterday criticised the Government for failing to follow through on its previous promise of a guarantee scheme aimed at keeping the flow of export credit insurance going.

“Government inaction continues while solid viable exporters are running out of cash to keep trading on a daily basis and forced into unnecessary closure,” commented IEA chief executive, John Whelan.

“Credit insurers are responding to the higher international risk climate by reducing their exposure. In doing this, they have reduced the insurance cover and cash flowing of overdue debtor payments and this, in turn, reduces the credit worthiness of the exporter in the eyes of his suppliers and bankers.We are looking at market failure on a massive scale, which has already led to widespread creditor liquidations,” he added.

The IEA met with the Government last month to press the need for an underwriting programme for the export credit insurance schemes.

According to the body, the Government — the Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan, in particular — acknowledged the challenge for exporters and indicated it would be prepared to jointly guarantee, along with the insurance underwriters themselves, a scheme to keep the export credit insurance market open.