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Operational Efficiency

Steps to help you prepare for Brexit

You may think that until the terms of Brexit are negotiated, there is no need to start preparing for it. In this blog, Alan Reid, Specialist Manufacturing Advisor at the Hub will take you through three potential scenarios for the outcome of negotiations and suggests steps so you can act now. 


Whilst politicians in Brussels and Westminster are still negotiating what March 2019 might look like for British trade, for lots of manufacturing firms Brexit starts now.

Many manufacturing businesses operate in complex supply chains, reliant on international suppliers or servicing overseas customers. In all cases, Brexit will impact the cost of doing business overseas and the process to service this activity will also change.

What outcomes are likely?

The potential outcomes of the negotiation are varied, but generally speaking it is presumed that one of the following options will be agreed upon:

Retention of Single Market membership and the Customs Union

Membership of the EU has meant that the UK has traded as a member of the single market within Europe. This means that trade has been without restrictions or tariffs. Access to the single market requires the member state to agree to the free movement of capital, goods, people, and services.

The Customs Union similarly has allowed the UK to import goods from Europe with a single import duty rate.

Both the Prime Minister, Theresa May and the Labour Party Leader, Jeremy Corbyn have said that Britain would not remain a member of the single market or customs union, which will leave the UK open to negotiating free trade deals with other markets.

No deal

If Britain was to leave the EU without negotiating a trade deal, this would mean importing and exporting would be liable to the tariffs laid out by the World Trade Organisation (WTO).

As an example, the British Retail Consortium (BRC) has found that 25% of British food and drink is currently imported, with 80% coming from the EU. The BRC have calculated that the average WTO tariff on these imported goods from Europe would be 22%.

Bespoke deal

There are several existing trade deals which the UK may look to replicate. This could include membership of the European Free Trade Association, which consists of Iceland, Liechtenstein, Norway and Switzerland, and offers access to the single market, or the EU–Canada Comprehensive Economic and Trade Agreement, which has been the preference of David Davis MP, the Secretary of State for Exiting the European Union.

How can I start to prepare?

Regardless of the outcome, if your business imports or exports there are still preparations that you can begin to make now.

Research

  • Look at your supply chains and make sure you know where your materials are coming from. Even if you use local suppliers, it may be that your materials are originally sourced internationally and this could impact the price you are paying.
  • Look at the World Trade Organisations website and download the tariff information. This will give you a starting point to understand how your prices could be impacted.

Plan and consider your options

  • Once you know what tariffs you could be paying, look at your business plans. Will this affect your price per unit and will your customers be willing to pay this increased price? If not, are you able to consider UK based suppliers? The organisation Reshoring UK can help you to find new suppliers based on your specific requirements.
  • Consider whether the use of UK suppliers be utilised commercially? Is there a sales advantage to state ‘sourced in the UK’ via campaigns such as Made in Britain?

Get help

  • If this seems overwhelming then why not bring in expertise to help you prepare. The Manufacturing Growth Fund will be hosting a series of events across the North West which are designed to help you prepare for Brexit and introduce you to local experts who can support this. The workshops are fully-funded to attend, prepare your business for Brexit.
Manufacturers making plans on a workbench

Look at your supply chains to understand where you source your materials from and consider if sourcing locally could offer you a competitive edge.

If you want to get support on how your business will be affected, the Manufacturing Growth Fund can help – either with fully-funded support or access to funding. If you would like to find out more about this please do get in touch. It will just take five minutes to understand your needs and book an appointment.

This blog originally appeared on Boost - Lancashire's Business Growth Hub's website in January 2018.

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Alan Reid

Alan Reid, Manufacturing Advisor

Alan has over 3 decades of experience in the manufacturing sector, most recently running an engineering and services business.

During his career, he has developed innovative manufacturing systems which have enabled a string of overseas machine sales to countries in the EU and the Far East. Similarly he has sold and managed a number of high value contracts to blue chip organisations in the USA.

A Chartered Engineer, he is experienced in developing bespoke strategies to deliver operational and business success.