Northern Ireland Protocol: Engineering exporter calls for Irish Sea Border mechanism to be scrapped

A Craigavon manufacturer has called for the NI Protocol to be scrapped, saying it has already added an annual six-figure cost to his business – which is set to double when UK government support ends.

By Philip Bradfield
Tuesday, 14th June 2022, 6:52 pm
Updated Thursday, 16th June 2022, 7:00 pm

Ashley Pigott is managing director of AJ Power in Craigavon, which employs 125 people across sites in NI, Sweden, South Africa, and Dubai.

The company manufactures diesel generators and exports 80% of its output to more than 80 countries.

The generators they manufacture are made up of 80% components supplied from England, which means his company is feeling the sharp end of EU customs requirements when ‘importing’ component parts from GB.

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Ashley Pigott, Managing Director of AJ Power in Craigavon, has called for the Northern Ireland Protocol to be scrapped.

While the Irish Sea border has already added a six-figure sum onto his annualised overhead costs, he said this will double when the government’s Trade Support Service (TSS) customs support service winds up this year or next.

The Consumer Council for Northern Ireland recently revealed that at least 130 companies in GB had stopped supplying consumers in NI due to increased red tape in the wake of Brexit. Secretary of State Brandon Lewis recently told MPs the figure was actually around 200 companies.

Ashley gave two examples of how the protocol hurts his business.

In the first, he explained that when bringing a pallet or box in from Northampton, the haulage company will impose a protocol-related surcharge, due to the extra paperwork.

Then the second half of the paperwork must be completed via the government’s TSS service. This may then trigger a further customs charge if the import is deemed to have originated outside the UK. But the additional protocol-related costs are £30-50 with every shipment, whether the item is worth £1 or £50,000.

In his second example a French cable manufacturer will only distribute a cable he needs to him via their GB subsidiary, for which the protocol imposes 3.7% import duty “for no added value”.

His company lists some 15,000 components in their system, which mostly come from GB and are subject to these customs rules.

At present the government pays for the TSS system to help complete protocol-related customs paperwork, at an estimated cost of £500m per year. But this service is going to end this year or next.

With TSS, the current cost for the haulier is £15-30 per item; total protocol-related administration costs for his business in the past year is a six-figure sum. But after the TSS ends, if the EU goes for “full implementation” of the protocol then his business will face a further six-figure sum in full customs administration costs.

He said: “And it adds no value to the business at all. Our GB competitors do not incur these costs and have a competitive advantage with duty-free access to EU markets under the TCA free trade agreement.

“A further complication will be country of origin rules. If any imports from England are deemed to be made with over 50% of non-UK parts, it will not qualify as being of UK origin and the EU will impose up to 4.2% import duty.

“So therefore component manufacturers in England that supply GB and are not interested in supplying into Europe will generally not be interested in supplying to Northern Ireland any longer.”

The alternative would be to provide full traceability on the origin of every part of any item they would ship to him from England “and the costs of doing so are horrendous”.

These extra costs won’t threaten the viability of his business, he said. “But it might threaten the viability of it producing in Northern Ireland in the longer haul.”

Mr Pigott argued that for his business there is no real advantage from the protocol if selling products into the EU. The only advantage would be for companies selling ‘regulated’ products into the EU, such as pharmaceuticals, agri-food products and items deemed a biosecurity risk.

His wishlist going forward is simple: “Get rid of the protocol. And that is a business statement – it is not a political statement.”

:: Are you a business or consumer finding challenges with importing from GB due to the Northern Ireland Protocol and the Irish Sea Border? Email [email protected]