Importers are finding it increasingly difficult to cope with the continued strength of sterling against the pound. Price rises are now being implemented in many sectors. Whereas the early upward moves by sterling were offset by the fact that most firms buy their sterling ahead of time, they now have to buy sterling valued at an exceptionally high rate.
While most importers who spoke to The Irish Times support a re-valuation, exporters claim they have similar currency problems when trading with Germany and France. They say a re-valuation would be disastrous for their business.
The most damaging consequence of the continuing strength of sterling would be if importers started letting employees go.
The managing director of a Wexford-based company said he will have to start laying people off from next week as a result of the weakness of the pound against sterling.
The company has been looking for ways to source raw materials outside Britain, but with little success. Mr Michael Ryder, managing director of Easons, one of the largest importers in the country, increased prices for all magazines from Britain by 5 per cent this week.
The bulk of Easons stock was subject to the price rise. The review of prices usually coincides with a review of the pound's performance against sterling.
Mr Ryder says importers and exporters "ignore the relationship with sterling at their peril".
He says the decision by the British Chancellor of the Exchequer, Mr Gordon Brown, to hand over the control of interest rates to the Bank of England governor, Mr Eddie George, had a major impact on the position of sterling.
A spokesman for the video conferencing supply company, Mediacom, said it was "somewhat insulated" from sterling's strength because it was paid by customers in Irish pounds.
He says the decision by the British Chancellor of the Exchequer, Mr Gordon Brown, to hand over the control of interest rates to the Bank of England governor, Mr Eddie George, had a major impact on the position of sterling.
This week the Small Firms Association (SFA) has suggested an import substitution scheme, which could be co-ordinated by the Irish Trade Board.
Mr Pat Delaney, spokesman for the SFA, says several exporters currently have an over-capacity which could be utilised by a "sizeable group of importers".
The idea for an import substitution scheme is really only available to manufacturers, according to Mr Delaney.
Mr Delaney says some Government agency should be able to supply importers with lists of manufacturers who can help them with materials, which are currently sourced outside the Republic.
"One of the main problems is that many importers have not researched all the options, and there are new companies starting all the time with the ability to supply hard-pressed importers." Mr Ian Martin, managing director of Martin Services, a small Dublin firm that supplies first-aid materials to companies and health boards, is this week implementing an 8 per cent price increase.
He says a 12 per cent price increase would be needed to compensate for the strength of sterling, but he says the "market would not bear such an increase".
At the end of May the pound stood at 92p sterling, but when he bought sterling last week, it stood at 88p. His main British supplier is forecasting a serious recovery by the pound against sterling by October, when Mr Martin estimates it will be back at 95p.
Meanwhile, exporters do not accept they are experiencing a bonanza as a result of sterling's strength.
Mr John Byrne, sales director of Quality Ceramics, says the Arklow-based company does almost 50 per cent of its trade with Britain, but sales figures for the last two months have not shown dramatic increases.
He says contracts with customers are reviewed and renewed on a six-month basis, which means benefits from sterling's strength have not come through yet.
He says a re-valuation would only be a short-term measure and would have a detrimental effect on firms building their market share in Britain.
A spokesman for the video conferencing supply company, Mediacom, said it was "somewhat insulated" from sterling's strength because it was paid by customers in Irish pounds.
The spokesman pointed out that the position of the pound against the dollar was more alarming for companies in the area of software and computers, as it was "often very difficult" to source components in the Republic or Britain.
Mr Padraig Tymon, from M&T Machines in Galway, says his company recently moved away from exporting to Britain and switched to the German market.
The pound's position against the deutschmark is now hurting his operations there, and attempts to break into other European markets are proving difficult.
