Brexit No Deal?
The howl of despair from manufacturers was almost audible this week as the Government announced its intention to consider a “Managed No Deal” as a solution to the current Parliamentary impasse over the Brexit deal with the EU. “Managed No Deal” is one of those expressions that are supposed to reassure and in fact do the opposite a bit like the safety card in aircraft that advises what to do in the event of a landing on water. Government plans include calling on the army to maintain order, cornering the market in fridges and turning East Kent into a lorry park. The Government is sending 140,000 letters to small and medium sized businesses advising contingency planning by stocking up on essential raw materials for up to 6 months. They assume naively that small businesses can invest 50% of their annual cash flow in stock. Having spent 25 years fine tuning a supply chain. Just in case now replaces just in time. HMG also advocates employing extra skilled staff to deal with the beurocracy of importation paperwork. They imagine that such skilled workers are already trained up and hanging around in Job Centres clutching their diplomas in customs clearance and waiting for the call.
The undeniable truth is that small businesses are on their own in dealing with Brexit, we have to swim or sink. A No Deal Brexit will inevitably change the structure of industrial supply chains. We have got used to being able to buy anything we need from a large unified European single market, this will now now change. It has been as easy to buy from Bilbao or Budapest as from Birmingham or Bolton. From March 2019 customs checks, tariffs and vat payments will come in.
From end April 2019 we believe that local suppliers will become increasingly important. The pressure on cash flows from having to pay VAT at the border will increase the attractiveness and competiveness of UK based suppliers. If those suppliers have world wide manufacturing partners and a diverse product range thats all to the good. If those suppliers put quality and customer service to the fore that’s even better. If the suppliers take the responsibility for making importation easy and continue to offer standard credit terms that’s just about perfect. Look no further, Avocet Precision Metals is your partner for the supply of metal products post Brexit – we are prepared.