With a little under nine months to go before Britain is set to leave the EU, and no clear vision as to what deal Britain might secure, many UK firms that trade with the bloc are setting up European bases or even mulling the shifting of their entire operations to mainland Europe.
One such company is Polydron, a UK-based maker of educational toys. It manufactures in India and China and sells to customers worldwide, including 105 in the 27 other EU countries.
The bloc's toy safety regime makes Polydron, as the importer into the bloc, responsible for checking that its products meet European standards. "It is our phone number on the goods, and if there is a problem it is us who gets called up," says managing director Richard Hardstaff. However if Britain leaves the EU's single market, each of Polydron's EU customers would become an importer instead he fears that relations with customers could suffer.
Given the potential complications, the Cirencester company is opening a branch and hiring staff in Germany to be the EU importer, handling 30% of the company's operations. "We would never have done this without Brexit," Hardstaff says [FT].
Polydron is far from an isolated case. In February 2017 it was reported that around one third of manufacturing firms wanted to move some operations out of UK after Brexit [Independent].
By the end of 2017 the warnings had turned into reality as both financial firms and manufacturers began to make the shift [Verdict].
One such company is Polydron, a UK-based maker of educational toys. It manufactures in India and China and sells to customers worldwide, including 105 in the 27 other EU countries.
The bloc's toy safety regime makes Polydron, as the importer into the bloc, responsible for checking that its products meet European standards. "It is our phone number on the goods, and if there is a problem it is us who gets called up," says managing director Richard Hardstaff. However if Britain leaves the EU's single market, each of Polydron's EU customers would become an importer instead he fears that relations with customers could suffer.
Given the potential complications, the Cirencester company is opening a branch and hiring staff in Germany to be the EU importer, handling 30% of the company's operations. "We would never have done this without Brexit," Hardstaff says [FT].
Polydron is far from an isolated case. In February 2017 it was reported that around one third of manufacturing firms wanted to move some operations out of UK after Brexit [Independent].
By the end of 2017 the warnings had turned into reality as both financial firms and manufacturers began to make the shift [Verdict].
A gradual Brexodus
Diageo moved its vodka production out of Scotland because of Brexit, shifting its production of Smirnoff and Circo vodka to Italy and US leading to the loss of 105 roles at its plants in Fife and Glasgow.
Barclays was one of the first banks to begin shifting operations, making a move to the Irish capital Dublin for its post-Brexit European hub. But many other financial institutions followed through. Nonetheless by July 2018 some institutions were still dragging their feet with many having failed to apply for appropriate licenses by mid-2018 [Bloomberg].
Whilst the exodus has been more of a trickle than a mad rush for the borders, the signs are nonetheless worrying.
Almost every week there are reports of companies moving parts or all their operations abroad, though much often gets buried underneath other stories.
In January 2018 reports emerged suggesting many UK chemical companies were shifting operations to other EU jurisdictions ahead of Brexit [ICIS].
It wasn't just companies however. Figures released the same month showed the number of Britons seeking French citizenship had rocketed eightfold in the previous three years [Independent].
February meanwhile saw Goldman Sachs mulling the sale of its London HQ as it weighed up the risks of remaining in London post-Brexit [Bloomberg]
Diageo moved its vodka production out of Scotland because of Brexit, shifting its production of Smirnoff and Circo vodka to Italy and US leading to the loss of 105 roles at its plants in Fife and Glasgow.
Barclays was one of the first banks to begin shifting operations, making a move to the Irish capital Dublin for its post-Brexit European hub. But many other financial institutions followed through. Nonetheless by July 2018 some institutions were still dragging their feet with many having failed to apply for appropriate licenses by mid-2018 [Bloomberg].
Whilst the exodus has been more of a trickle than a mad rush for the borders, the signs are nonetheless worrying.
Almost every week there are reports of companies moving parts or all their operations abroad, though much often gets buried underneath other stories.
In January 2018 reports emerged suggesting many UK chemical companies were shifting operations to other EU jurisdictions ahead of Brexit [ICIS].
It wasn't just companies however. Figures released the same month showed the number of Britons seeking French citizenship had rocketed eightfold in the previous three years [Independent].
February meanwhile saw Goldman Sachs mulling the sale of its London HQ as it weighed up the risks of remaining in London post-Brexit [Bloomberg]
Store closures
As Britain's high streets saw further declines and the closure of Maplin and Toys R Us, Unilever announced it was upping sticks and moving its HQ to Holland [Reuters].
April saw more closures on the high street with House of Fraser and M&S axing many of its stores as figures showed retailers were suffering the sharpest sales drop for 22 years [BBC / Guardian / Guardian].
May brought more bad news for the high street with Carphone Warehouse announcing the shutting of 92 outlets after a profits warning [BBC].
By June there was little if no respite from the gloom and doom with Rolls Royce announcing it was to cut nearly 5000 jobs at its Derby plant [BBC]. And there were reports that a no-deal Brexit could result in the UK running short of medicines, food and fuel within two weeks of leaving the EU [Sky News].
As Britain's high streets saw further declines and the closure of Maplin and Toys R Us, Unilever announced it was upping sticks and moving its HQ to Holland [Reuters].
April saw more closures on the high street with House of Fraser and M&S axing many of its stores as figures showed retailers were suffering the sharpest sales drop for 22 years [BBC / Guardian / Guardian].
May brought more bad news for the high street with Carphone Warehouse announcing the shutting of 92 outlets after a profits warning [BBC].
By June there was little if no respite from the gloom and doom with Rolls Royce announcing it was to cut nearly 5000 jobs at its Derby plant [BBC]. And there were reports that a no-deal Brexit could result in the UK running short of medicines, food and fuel within two weeks of leaving the EU [Sky News].
Slow growth, weak pound & poor sales
Of course there will be some who might insist the slow growth, a sharp decline in high street sales and the shuttering of retail outlets have nothing to do with Brexit. It could certainly be argued that there are other factors involved. M&S, for example, have had problems attracting customers and creating a model that works. Other retailers have of course been hit by increased spending online.
But the pound has remained consistently weak since the EU referendum and it has resulted in higher prices across the board. Coupled with the uncertainty Britain faces in the run up to March 2019 many consumers are undoubtedly more cautious with their spending.
And whilst it might be easy to dismiss business concerns about a possible hard-Brexit and uncertainty over future trading relationships and customs procedures, one can hardly blame companies making contingency plans.
Airbus and BMW have already warned of the consequences for their multinational, just-in-time operations of leaving the bloc's customs union because of the risk of tariffs and customs hold-ups. But there has been little response from May and her government other than vague promises that it will be OK.
But business cannot plan future investments and deals on vague promises. They need certainties and definite and clear regulations. One cannot plan with the hope that just-in-time deliveries continue. One needs to know that deliveries WILL continue and arrive ON TIME.
If a supply chain fails, so too does the production line. And if the product does not get made it can't be sold and profits are lost.
The recent reports of a possible 'Doomsday Brexit' have been dismissed by many as scaremongering and a repeat of 'project fear'. But small disruptions can quickly result in very serious supply chain problems.
Of course there will be some who might insist the slow growth, a sharp decline in high street sales and the shuttering of retail outlets have nothing to do with Brexit. It could certainly be argued that there are other factors involved. M&S, for example, have had problems attracting customers and creating a model that works. Other retailers have of course been hit by increased spending online.
But the pound has remained consistently weak since the EU referendum and it has resulted in higher prices across the board. Coupled with the uncertainty Britain faces in the run up to March 2019 many consumers are undoubtedly more cautious with their spending.
And whilst it might be easy to dismiss business concerns about a possible hard-Brexit and uncertainty over future trading relationships and customs procedures, one can hardly blame companies making contingency plans.
Airbus and BMW have already warned of the consequences for their multinational, just-in-time operations of leaving the bloc's customs union because of the risk of tariffs and customs hold-ups. But there has been little response from May and her government other than vague promises that it will be OK.
But business cannot plan future investments and deals on vague promises. They need certainties and definite and clear regulations. One cannot plan with the hope that just-in-time deliveries continue. One needs to know that deliveries WILL continue and arrive ON TIME.
If a supply chain fails, so too does the production line. And if the product does not get made it can't be sold and profits are lost.
The recent reports of a possible 'Doomsday Brexit' have been dismissed by many as scaremongering and a repeat of 'project fear'. But small disruptions can quickly result in very serious supply chain problems.
Fragile supply chains
In 2000 and 2001 there were a number of fuel protests and blockades with pickets stopping fuel deliveries to forecourts up and down the UK. Within days some 3000 petrol stations were out of fuel and the government was on the verge of introducing emergency measures and even considered bringing in the army to deliver fuel.
More recently something as simple as a shortage of food-grade CO2 has resulted in lager and cider running out in some pubs. Meat supplies have also been affected as CO2 is used in the slaughter process and also in prepackaged meat to preserve it longer [Bloomberg]. Interestingly the UK is one of the countries which has been the hardest hit as it imports the majority of the CO2 it uses. It is not clear how future customs arrangements might affect such things as CO2 imports but the recent problems only highlight the obstacles Britain might well face come Brexit day.
"It's like water — it's everywhere but no one knows how important it is until it suddenly stops being there," says Tim Lang, professor of food policy at City university.
For Richard Griffiths, chief executive of the British Poultry Council, the CO2 shortage has highlighted broader issues of supply chains and food security. "Nothing like this has happened in this part of the supply chain, so no one has focused on it. This does illustrate the vulnerability of these, usually robust, integrated supply chains when something so fundamental is affected," he said.
With Brexit looming, Professor Lang, co-author of a 2017 report on the implications to the UK's food system on leaving the EU without adequate planning, says, "The CO2 shortage is a useful reminder of the enormous implications of disrupting the efficiency of the food system." [FT]
This week concern within the car industry grew as Jaguar Land Rover warned that a "bad" Brexit deal would threaten £80 billion worth of investment plans for the UK and may force it to close factories.
The UK's biggest car maker, owned by India's Tata Motors, said while its "heart and soul is in the UK", a hard Brexit would cost £1.2 billion a year in trade tariffs and make it unprofitable to remain in the UK.
The warning came as Downing Street set out details of a possible post-Brexit customs arrangement and only days after Airbus and BMW voiced their concerns over the direction Britain is taking, that of not only leaving the EU, but also the customs union and the single market [BBC / FT].
There may well be some interesting if rather painful days ahead should Britain pursue its current course.
tvnewswatch, London, UK
In 2000 and 2001 there were a number of fuel protests and blockades with pickets stopping fuel deliveries to forecourts up and down the UK. Within days some 3000 petrol stations were out of fuel and the government was on the verge of introducing emergency measures and even considered bringing in the army to deliver fuel.
More recently something as simple as a shortage of food-grade CO2 has resulted in lager and cider running out in some pubs. Meat supplies have also been affected as CO2 is used in the slaughter process and also in prepackaged meat to preserve it longer [Bloomberg]. Interestingly the UK is one of the countries which has been the hardest hit as it imports the majority of the CO2 it uses. It is not clear how future customs arrangements might affect such things as CO2 imports but the recent problems only highlight the obstacles Britain might well face come Brexit day.
"It's like water — it's everywhere but no one knows how important it is until it suddenly stops being there," says Tim Lang, professor of food policy at City university.
For Richard Griffiths, chief executive of the British Poultry Council, the CO2 shortage has highlighted broader issues of supply chains and food security. "Nothing like this has happened in this part of the supply chain, so no one has focused on it. This does illustrate the vulnerability of these, usually robust, integrated supply chains when something so fundamental is affected," he said.
With Brexit looming, Professor Lang, co-author of a 2017 report on the implications to the UK's food system on leaving the EU without adequate planning, says, "The CO2 shortage is a useful reminder of the enormous implications of disrupting the efficiency of the food system." [FT]
This week concern within the car industry grew as Jaguar Land Rover warned that a "bad" Brexit deal would threaten £80 billion worth of investment plans for the UK and may force it to close factories.
The UK's biggest car maker, owned by India's Tata Motors, said while its "heart and soul is in the UK", a hard Brexit would cost £1.2 billion a year in trade tariffs and make it unprofitable to remain in the UK.
The warning came as Downing Street set out details of a possible post-Brexit customs arrangement and only days after Airbus and BMW voiced their concerns over the direction Britain is taking, that of not only leaving the EU, but also the customs union and the single market [BBC / FT].
There may well be some interesting if rather painful days ahead should Britain pursue its current course.
tvnewswatch, London, UK
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