Case Study: Robin Penny on 4 ways a no-deal Brexit would affect Penny Hydraulics

 

Robin Penny is Managing Director of Penny Hydraulics, a UK-based manufacturer of lifting equipment that imports components and raw materials from Europe. Here, he explains what kind of impact a no-deal Brexit could have on the company.

 

Although there’s still a great deal of uncertainty surrounding Brexit, it’s clear that there’s a distinct possibility the UK might leave the European Union without a deal. In this situation, we would leave the single market and customs union ⁠— both of which are arrangements designed to help EU members trade among themselves by eliminating border checks and import taxes.

 

These changes could have huge ramifications for British businesses that rely on the EU and, here, I’m going to discuss how we foresee our company being affected if a deal isn’t agreed upon.

 

We might have to look for suppliers from further afield

 

Approximately 75% of the materials we use to manufacture our products are imported from Europe. This means, if we crash out of the EU without a deal, our supply chains are going to be hit by newly instated border controls at Dover and Calais. The main issue with this is that the infrastructure isn’t yet in place. So, more border control officers need to be recruited, procedures need to be put in place, and space needs to be made for all of the lorries that are going to be checked before they can cross the border.

 

It’s likely this will cause a great deal of chaos at first, so we are thinking about looking for alternative suppliers from further afield. This is because routes for importing and exporting materials between the UK and countries outside of the EU are already established. So, while it might have been more cost- and time-effective to only trade with other members of the EU in the past, this might not be the case for much longer.

 

It could make recruitment more difficult

 

In our eyes, the most pressing issue is recruitment. The government is certainly making an effort to fill the UK’s skill gaps with schemes such as the apprenticeship levy, but it will be years before Britain has enough skilled workers to be self-sufficient. So far, companies like ours have been making ends meet by recruiting people from abroad, but it’s likely this will become much more difficult if we can’t agree on a deal with the EU. As a result, we’ll have to start looking further afield for talent, as well as put even more effort into encouraging the UK’s younger generations to pursue careers in manufacturing.

 

It’s preventing us from developing new products

 

Because we’re having to put most of our efforts into safeguarding our business against the effects of Brexit, we’ve been struggling to put enough work into developing new projects. And, this is a problem we’ll continue to face until we’ve left the European Union, and everything’s settled down.

 

Of course, we’re also not sure how difficult it’s going to be to source certain materials post-Brexit, which is another reason why we’ve been hesitant to come out with new designs. So, this is an area where we’re already feeling the effects.

 

We’re stockpiling components and raw materials

 

Whatever happens, there’s going to be a period of confusion following Brexit, so we’ve already rented extra warehouse space and started to stockpile materials that we might struggle to get a hold of. The idea is that this will help us to complete all of our jobs as usual in the wake of Brexit without having to rely on the channels we’ve previously used to trade with other members of the European Union — at least until the dust settles.

 

Hopefully, managing our stock in this way will give us some time to consider what the best course of action is going to be. If it becomes clear that continuing to trade with the EU is going to be too difficult, we can start to look for new suppliers. Or, we can work on establishing new agreements with the companies we currently work with. The most important thing is that we’ll have reserves of stock that we can fall back on should we need them.

 

Right now, UK businesses need to be preparing for every possible outcome of Brexit. While we’re certainly hoping all parties involved can come to an agreement, we’re aware that we might leave the European Union without a deal. So, we’ve been thinking a lot about what that could mean for us, and how we can adapt to survive and thrive, regardless.

 

 

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