logistics is a potential problem, but communication with European businesses doesn’t have to stop. Where’s the barrier?”
‘Us & Them’ mindsets, Barnett inferred: “Pragmatically, I would hope we are above that, but I’m really struggling to talk and progress things within the EU.”
Hawkins suggested both sides might be guilty of ‘cutting off one’s nose to spite one’s face’.
Bob Atkinson pointed out that Brexit was a risk for both the EU and UK. De-risking through delayed decision- making, stockpiling or alternative supply contingency planning were common sense measures.
Holding stock would not be an option for suppliers utilising Just-in-Time and Lean business models, noted Matthew Caffrey and Sue Flanagan.
“They need to meet delivery contracts or face penalties,” added Richard Perriman. “Speed and continuity of delivery will still matter post-Brexit.”
Richard Devall: “It’s just uncertainty driving all this, isn’t it?” A suitable Brexit transition period would avoid any trading ‘cliff-edge’ and help resolve such issues, he felt.
Can the customs systems cope?
“I don’t want to be an undertaker of doom but Brexit has the potential of being a car crash in terms of maintaining frictionless trade with the EU,” stated supply chain specialist Perriman.
“The Government is focused on appeasing UK businesses with new free trade deals but my clients are concerned with the potential complexities involved.”
Perriman highlighted the proposed CDS customs system planned to be introduced in January 2019. “Requisitioned in 2003, it is still very much in the ‘testing phase’. Anyone who thinks we can simply come up with a new scanning system is living in a dream world. We are decades away; it’s not a simple switch of systems.”
The existing system, in place since 1989, can handle 50 million rest-of-world entries per year. Post-Brexit, plus EU entries, that would rise to 210m. CDS was being designed for 100m entries, explained Perriman.
“At a granular level what has been missing is the reality of what is required in the process for clearing imported and exported goods.”
Tom Jeffery agreed. His company transports bespoke AV equipment for events throughout Europe. “No truckload is the same, so we’ll have to do customs carnets for each of them. We have US clients already suggesting that post-Brexit they may have to look for an EU supplier.”
THE BUSINESS MAGAZINE – JANUARY/FEBRUARY 2019 Currency and complexity concerns
Kate Arnott: “We are seeing more manufacturing businesses hedge currency on contracts. That might smooth out currency fluctuations, but it won’t solve logistics issues.”
“Currency fluctuations were now a risky process in the volatile Brexit era”, noted Atkinson. “Hedging options are possibly vehicles to help smooth the way on larger projects”, but Flanagan felt this would be too complex for small manufacturing businesses to be able to exercise.
Stockpiling, cost-saving through production efficiencies, formation of subsidiaries or renting of space in the EU were also current business activities, said Arnott. “Worryingly for UK manufacturers, more French and German companies are also setting up over here. Supply chains can be two-way, after all.”
“Oddly enough it evens things up,” remarked Atkinson. “By holding their stock in UK, it brings us extra jobs and so on.”
Arnott: “The stumbling block is going to be the customs complexity, whatever systems come in. Customs duties, declarations etc, are already backlogged. VAT is going to become more complex too. You can obtain AEO (authorised economic operator) status to simplify things, but it takes a crazy-long time to get.”
Perriman: “If everyone has a AEO ‘speedy boarding pass’, no-one has an advantage. Other customs processes, such as CFSP, will put more of the onus and form-filling on the importer-exporter.
“Whether we get a Brexit agreement or not, the complexity remains. Will goods flow smoothly as they do in the EU now – absolutely not.”
Concerned about “the rigmarole” of meeting free trade deal criteria, Perriman added:
“If our international trading goes to WTO (World Trade Organisation) rules our status will have to be replicated with other WTO trading nations; it won’t be the same as a Most Favoured Nation (MFN) status that we may have with the EU.
“The average trade deal takes about seven years to negotiate.”
Will UK standards be valid? Will ‘Made in Britain’ matter?
Roundtablers had mixed views about post- Brexit product standards, certification and regulatory frameworks.
Caffrey: “I think standards generally are likely to be an issue, because certain sectors, automotive etc, depend heavily upon them.”
Barnett’s aerospace business sector is Continued overleaf ... Jon Hawkins Richard Perriman Richard Devall 100 TM
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