23 May, 2022

Boardroom Report - Challenges and opportunities

11 February, 2021

says. “In fairness, such areas tended to be in the financial and general services sectors rather than in the area of goods, which will have the greatest impact upon the fluid power sector. However, I feel that it was somewhat disingenuous to announce the deal as being ‘tariff-free’ as the rather obvious and understated caveat to this was the fact that goods are only tariff-free if they meet the necessary rules of origin, and most of the confusion that has since arisen revolves around the disproportionate complexity of these rules.”

Buxton explains that the BFPA seeks to help members through this jungle of regulation but considers that the more one delves into the subject the more complex it becomes. “Fluid power companies, like most product-driven industries, will have to examine their supply chains to check that they meet percentage thresholds for content,” he says. “This is a non-trivial exercise, and many are having to employ expensive consultants to help them through the process. On the potential upside, we may see an increase in domestic sourcing of product as the cost of importing increases – as it surely will.”

Chessari believes that, with Brexit, we are facing increased red tape for certain products as well as increased transport costs for imports and exports. “Even with the EU zero custom duty trade deal we will still see an increase in administration costs and logistic issues,” he says. “Brexit is also creating a lot of uncertainty and this is the most difficult year to forecast. In the next 6 months I think that logistics delays will be resolved as the carrier companies become more organised with group shipments, more familiar with the new required documentation and UK exporters start using new software (like CHIPS) to deal with customs directly without paying this charge to the transporter. Brexit will have increased costs for UK businesses and the only options for the next 2 to 3 years will be to either absorb the cost or to transfer it to the EU customers. In the long-term Brexit could be successful only if the UK manages to negotiate good deal with non-EU countries.”

In terms of the Brexit outcome uncertainty during 2020, Gunter explains that Abdex increased its stock inventory by around 40% to ensure its customers would not experience any slowdown in supply within the UK. Some suppliers in Europe and the US were naturally concerned by the pandemic and their ability to work as normal. In the event, they operated very efficiently under the circumstances. Nevertheless, we felt the best thing for us to do was to boost stock to protect the needs of our customers just in case there were any supply issues further down the line, whether due to a bad Brexit outcome, the effects of the pandemic, or both.”

Martin Cuthbert comments that Webtec recognised the threat that Brexit would have on its business as soon as the Referendum happened in 2016. “Speaking to many of our customers in central Europe, their perception has been one of dismay and it has clearly made the UK a less attractive place to consider purchasing from as we’ve progressed through the transition period,” he says. “The European perception seems to be that buying products from the UK is going to get much more complicated and much slower and therefore potentially more expensive, due to the increased burden of buying from the UK and shipping it into mainland Europe. Whether this turns out to be true or not is probably no longer relevant despite the last-minute trade deal as the damage is already done and people’s




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