First there was Brexit, then the Covid-19 pandemic and then war in Europe. Having endured a long period of intermittent lockdowns, supply chain issues and labour shortages, small businesses throughout Ireland are now bearing the brunt of the energy crisis, rising inflation and a skills deficit in some areas. 

The Design & Crafts Council Ireland (DCCI) has just completed its annual client survey for the financial year 2021. Anecdotally the DCCI says that the manufacturing cost base has deteriorated significantly in the last three months particularly with regard to materials and energy costs. 

The most recent comprehensive figures available, from a 2019 report carried out by Grant Thornton for DCCI, found that craft and design-led businesses (not including design in other industries) make a significant contribution to Ireland’s economy with some 54,000 people employed in the sector. 

Many of the micro and small businesses in the sector also contribute to Irish society by providing employment in rural areas, by engagement in the sustainable manufacturing movement and by playing a key role in ‘Brand Ireland’ – the idea that this country is an attractive place to live, work and visit.

While challenges for Irish craft businesses also include uncertainty in the tourism market (on which many of these businesses rely for sales) and in the domestic market (as rising costs potentially mean less disposable income for people to spend) other challenges reported to DCCI by its members include family commitments and access to finance. 

On a positive note, the DCCI says that inflation on imported packaged goods means that Irish goods can continue to compete and that demand for products exhibited at the Showcase Ireland 2022 trade fair is continuing to grow – protecting some of the exhibiting businesses in the short term. 

With more craft businesses realising the potential in online, and being supported to develop their online presence, DCCI say that online selling continues to grow for makers increasing gross margins and insulating them somewhat from the current challenges.

“Overall, 85 per cent of DCCI clients grew in 2021 or remained level in the previous year,” according to the report. 

I spoke to three prominent members of the Irish craft industry to find out how spiralling costs and other challenges are impacting their ability to do business. 

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Copperfish

Eoin Shanley of Copperfish in his workshop

Founded in 2016 by Eoin Shanley and his wife Yvonne McGarry, Copperfish is an award-winning business based in Co Wicklow. The brand is known for its traditional and contemporary handmade lighting using salvaged wood. Copperfish products are sold in leading design and interiors shops both in Ireland and abroad. 

Eoin Shanley says that the cost of running his business has been rising since the onset of the pandemic. Key areas of concern for him are freight, packaging and energy costs. 

“Sending products to the UK has become carnage since Brexit”

Shanley secured several new retail clients in the United States last August thanks to a trip to the Shoppe Object trade fair in New York with DCCI. While he is thrilled with his new trade customers and looking forward to building an ongoing relationship with them, Shanley says that the rising cost of freight now means that he is forced to send pallets of product rather than smaller amounts of product by post. His shipping costs have increased by 50 per cent in the past 12 months.

“Most US shops don’t generally import that much, so if you sell into America you have to give the retailer a ‘landing price’ – i.e. the price the object will sell for on their shop floor. This includes organising the retailer’s shipping, VAT, customs… We did Shoppe Object in August 2021 and since then we have had to switch from shipping boxes to shipping full pallets of lamps,” he says.

Shipping larger amounts of product has become the only financially feasible way for Shanley to send his product – a challenge for him when each item is slowly made by hand – but also for the shop owners. “It’s a much bigger investment for the retailer too, which means that I’ve to provide them with more credit time – so I’m out of pocket for longer,” he says. “However we have handpicked a number of fantastic retailers that we can grow with so it’s very exciting.” 

Prior to Brexit, the UK market represented somewhere between 10 and 20 per cent of Copperfish’s business. Now, Shanley says that issues caused by Brexit make it an enormous headache to do business there. Where previously the brand offered free postage and packaging to online customers in the UK this is no longer the case and he no longer has any retail outlets in Britain.

“We ship worldwide, but sending products to the UK has become carnage since Brexit,” he says. “It’s actually easier for us to ship to the US, even with all the checks and balances, than it is to ship to the UK. The US has been handling this kind of thing for so long that it is a fairly seamless process, but now in the UK there is a lot of confusion over customs, shipping, rates…”

“Recently I shipped to private clients in Finland, Sweden, America and the UK and it took more work to ship to one customer in the UK than the rest put together. What’s happening is that customers in the UK are getting additional customs charges on purchases and are getting a shock when they’ve to pay extra costs at the front door.” 

With every item being handmade, Copperfish don’t sell in huge volumes, but they dohave to be careful about how they ship their delicate products.

“There are worldwide supply problems with things you’d never think of” 

The company switched couriers this year. “We were with DPD for a long time and the cost kept creeping up so we switched to UPS and have found them very efficient but their costs are also creeping up,” says Shanley.

Importation of parts has also become more expensive. As an example, several years ago Shanley shipped salvaged wooden beams from a church in France – a process that cost him around €1,000. This year a similar endeavour was coming in closer to €4,000. 

Copperfish import their custom-made lightbulbs from a specialist manufacturer in Germany. Because of the delicate nature of the glass, the boxes, while light in weight, are large in size. “The volume of our packaging is huge so shipping them is a significant cost – the price of which has gone up by about 300 per cent since we started using these bulbs in 2017,” says Shanley. 

His suppliers have also been hit by disruptions in the global supply chain. “All our bulbs are technologically advanced LEDs which have little drivers in them and the manufacturer is having trouble getting those,” he says. “The whole chain is an issue. There are worldwide supply problems with things you’d never think of.” 

The brand has eliminated plastic packaging and uses only cardboard and paper packing products sourced from a company in Bray, Co. Wicklow which has also been forced to increase its prices. “It’s cheaper for us to buy bales of bubble wrap but our customers are discerning – they don’t want a big lump of plastic around these lovely handmade products,” he says. “We buy about a thousand boxes at a time and the price has gone up by 35 per cent in around 15 months.” 

While Copperfish lights and lamps take time to make, they are a simple product with very few components. “Our products are made from old timber, brass and copper wire so they are not complicated products – we are not making dishwashers or cars,” says Shanley, who does, however, use copper – which he says has increased in price by around 55 per cent in the past year.

Eoin Shanely with a Copperfish floor lamp

“We know where all our materials come from and as far as possible we use recycled products.  However I think that materials and labour availability is still being caught up with since the pandemic. Prices have gone up because the chain is damaged. Every tiny broken link in this vast chain is going to have huge ramifications right up through that chain. Copperfish is a tiny business, on a tiny island off the west coast of Europe and even we are affected by factories that we don’t even buy direct from.” 

Up until this year Copperfish always set wholesale prices for their retail clients once a year – usually in January before the Showcase trade fair in Dublin’s RDS.

“ It’s like a death by a thousand cuts – every little thing has gone up in price.” “

The rising costs of running the business mean that Shanley doesn’t think he’s going to make it to January 2023 before he has to increase his prices.

“We are trying to absorb what we can, where we can, but there is a limit to what we can do,” he says. Shanley says he may have to look at implementing 90-day price changes. “We already have quite tight margins and we can’t work for free.

Based in an industrial estate in Co. Wicklow, he says that he is not the only business owner experiencing these issues. “I guarantee you that no matter which of the business owners you speak to in the industrial unit – whether they’re making food or spraying cars – will tell you the same story. It’s like a death by a thousand cuts – every little thing has gone up in price.” 

McConnell Woollen Mills 

Promotional shot for McConnell Woollen Mills

McConnell Woollen Mills is a Co Clare based business which designs and manufactures contemporary knitwear for men and women using wool sourced in Ireland and from mills in Europe. Eighty per cent of McConnell products are sold abroad in countries such as Germany, Japan and the United States. In Ireland the majority of McConnell’s retail customers are based along the Wild Atlantic Way where the product is popular with overseas visitors. 

Anne Behan established McConnell in her home in 1999. Prior to the pandemic she employed 16 people. During the pandemic, when the factory had to close and orders were cancelled, she was forced to let people go. She is now back to employing eight staff members and the numbers are climbing again. 

Behan has always prided herself on being a local employer in her community of Killaloe in Co. Clare, so it was a real blow to her personally and as a business owner to have to let people go. “A lot of my staff work part-time four or five days a week. A lot of them are creative women whose kids are in school and they work around their schedules,” she says. 

“Collectively we are a big part of society. We keep people in their communities and employ people in rural areas.”

On March 16, 2020, every single order Behan had was cancelled. “We lost a lot of our good people because we didn’t have work for them to come back to and they retrained and moved onto different jobs,” she says.

Alongside the hidden cost of retraining staff, the most significant cost increase Behan is currently experiencing is the increase in the cost of getting her product sent around the world.

“The increase in carriage is just crazy. A box that used to cost me €5 to send is now €15. A box that cost €9 to send to the UK is now costing me anything between €35 and €55. Pre-Brexit there was a standard price for a box but now with Brexit it’s all done by weight and there are lots of additional charges on both my end and the customer’s end,” she says.

Like Copperfish’s Eoin Shanley, Behan usually holds her prices for the year, but the increase in the cost of energy is affecting her top line now too. “None of the increases seem to be around five percent, they seem to be huge price hikes that are very difficult to absorb. It’s difficult to make it work,” she says.

Anecdotally she says that packaging has gone up around 30 per cent with suppliers citing increases in the cost of power and raw materials for the price increases. “Even the paper swing tags that go on the garments have increased in price,” she says. 

Similar to Shanley, she says that interruptions to supply chains during the pandemic are still having a knock-on effect and that, because there has been a surge in production in Europe post-pandemic, it is difficult to get raw materials such as yarn and paper.

“A reduction in employer’s tax for hiring staff or a grant towards energy costs would be most welcome.” 

“Because there is still a rolling lockdown in China a lot of mid- to high-end garment companies seem to have moved their production to Europe which means there are issues getting raw materials from the mills.”

Energy price hikes have potential to significantly damage people’s businesses, says Behan. “We need electricity to run the business, it’s not like we can just cut it off. The last electricity bill was about 50 percent higher than the previous one.” 

“Temporary” price increases for carriage established during the pandemic do not appear to have decreased, says Behan. “Fuel has gone up in price, there is increased demand and there is a need for more staff so I understand why the costs for courier companies have gone up, however it does have a significant knock-on effect for a business like mine.” 

Her business is currently getting back on track, she is increasing both her production and her sales at home and overseas and is ready to take on more staff. “It’s very challenging to keep everything level when you’re being hit with small price hikes on everything and huge price hikes on other things,” she says. “A reduction in employer’s tax for hiring staff or a grant towards energy costs would be most welcome.” 

Edge Only 

Edge Only Jewellery

Jenny Huston is the founder of Edge Only, an Irish jewellery brand which specialises in music and culture-inspired genderless jewellery. The brand places a strong emphasis on sustainability – the jewellery is made in Ireland, the packaging is all eco-friendly and the brand uses 100 percent recycled and refined gold and silver. 

“The cost of freight is huge. Where I was paying €60 a couple of years ago, I’m now paying €150.”

At the moment Huston is absorbing as many of the price increases that she can so that the craftspeople who make her jewellery designs are not out of pocket, but she says that the rising costs of freight, packaging and raw materials are making it increasingly difficult not to pass those increases on to her customers. 

“One of the big things for smaller businesses at the moment are the cost of freight and packaging,” says Huston. “Take cafés for example – some of them have gone paperless and they’re saying this is due to the environment but I think it also has to do with cost.”

“The cost of freight is huge. Where I was paying €60 a couple of years ago, I’m now paying €150. We buy everything we can in Ireland but we go to Germany for our environmentally-friendly packaging and we go to Spain for our recycled chain because no one in Ireland makes these chains. The cost of getting these goods into Ireland has gone up hugely which means that ‘per piece’ the cost is going up – every box, every chain…This encourages you to buy larger volumes in the hope that the cost of freight will go down.” 

Being conscious of supply also puts pressure on small businesses like Huston’s because it’s a cash flow problem. “I think the big pressure point was realising that supply chain was a problem and things became very hard to get. It puts pressure on you to buy huge volumes in advance,” she says. “I put in a huge order last autumn in anticipation of potential supply chain problems at Christmas. 

While many of Huston’s designs can be purchased ready-made, she also designs bespoke pieces for some of her clients. Huston typically sources stones from her suppliers so that customers can decide which one they would like her to use in their bespoke design. “There is a huge difference between a ruby and a garnet for example,” she says. “So I usually order in a selection for the client to choose from and then they can make a decision. In this business the stone dealer sends the stones to the designer/ maker and then you only pay for what you keep.” 

In the past this was not a problem for Huston, but since Brexit, she is charged the full customs and VAT charges on every delivery of stones, regardless of the fact that she will be returning some or all of them. “There can be customs charges on some goods, VAT charges and handling charges from the courier company. It all shakes out in your end of year returns but it’s a cash flow problem – you’re paying the charges every time and you don’t get all the charges back.” 

When importing items from outside the EU, Huston does not have to pay VAT on gold or silver bullion or on her stones which are classed raw materials, however she does have to pay VAT on finished items such as her boxes and bags and her finished gold chain. If she was sourcing these items in the UK, as many small Irish businesses do, she’d have an even bigger headache, but currently her biggest challenge is the cost of freight. “

“The price of items may have to change on a daily basis”

“I’ve always had a good relationship with packaging manufacturers in Germany because of their sustainable credentials but with Covid-19, DHL and other companies added a temporary emergency surcharge that doesn’t seem to have been taken away. Now they are also adding significant fuel surcharges. The cost of freight seems to go up every couple of months.” 

The fluctuating price for gold and silver can be another moving target that Huston must deal with when it comes to setting her prices for both trade and commercial clients, and the war in Ukraine is having an impact on both the supply of diamonds and the price of precious metals. 

“Everything has calmed with silver but projections are that it will go up,” she says. “Whenever there is political or social unrest, bullion tends to go up as it’s considered more stable than currencies such as the Dollar or Sterling. People tend to go back into gold, silver, platinum and coloured gemstones.” 

Huston says that such fluctuations can do away with any profit margin. To mitigate this she has a caveat on her website. “You’ll often see ‘price on application’ on the websites of high-end jewellers for more expensive pieces,” she says. “This is because the price of items may have to change on a daily basis.” 

She herself is given an approximate price for her custom-made chains. “I never know until the day the chains are finished what the supplier is going to charge me and then I pay that rate based on the price of gold or silver on that day. When you are getting things custom-made at volume to your specification you pay according to price fluctuation.” 

“Some of our customers probably do come from a position of privilege which I am aware of.”

So far Huston says that she hasn’t seen a huge rise in her electricity bills. Being based in the Guinness Enterprise Centre she feels that perhaps the cost has been buffered somewhat. “They were very lenient with many of the businesses during the pandemic lockdown. So far it is packaging, freight and other things that have gone up. I tend to be really open about these things in our newsletters to our followers – we have had to explain to fans of the brand that gold prices may be subject to change due to market fluctuations.”

For now Huston is absorbing the costs and says that, luckily, her customers are those who continue to value all the other aspects of the brand such as the aesthetic and the ethical and sustainable credentials.

“Some of our customers probably do come from a position of privilege which I am aware of,” she says. “For many others there willbe price sensitivity, so all I can do is add value around all the other aspects of the brand – such as the fact that it is an independent business and that we are as sustainable and ethical as possible.”