POLITICS Time to confront the

After the huge impact of Covid-19 on businesses of all shapes and sizes, the uncertainty they have lived with throughout 2020 continues with less than three months until the end of the Brexit transition period and no sign of a trade deal being negotiated with the EU. Dan Robinson finds out how this is affecting companies and jobs in the East Midlands.

manufacturer he’s run for 24 years, reduced to taking just a third of its pre-Covid business at its lowest point in the spring, it shot back up to 75% as the economic recovery gained momentum in August. But just as optimism was taking hold, the

rebound plateaued in September and now there’s a dark shadow looming on the horizon – the B word. “It’s on a par with Covid-19” he says. “People

conveniently forgot about Brexit at the start of coronavirus but now it’s back on the horizon, and there’s very much a lack of confidence from manufacturing that the Government will be ready by the end of the year because we have to physically move goods across borders.” About 20% of MTM’s goods – which include

labels, aluminium nameplates and other industrial graphics products – are exported directly into the EU, and most of its materials are purchased directly or indirectly from the bloc. Prior to Brexit, and during this year’s transition

period, the firm has been able to send goods by either parcel carrier or pallet without tariffs or customs checks. From 1 January, when the transition period

comes to an end, it will have to deal with the extra costs of customs documentation, regardless of whether a trade deal is reached. A no-deal scenario, however, stands to cause

far-reaching problems. As well as trade tariffs, special VAT

arrangements for holding call-off stock in customer factories based in the EU would be

‘B word’ A

survivor of five recessions already, Ian Greenaway is confident he’s well-set to come out the other side of number six. Having watched MTM Products, the Chesterfield

assessed when the goods move across borders, rather than at the point of usage when suppliers like MTM transfer ownership to the client. This could require it to set up a subsidiary company in the EU. There’s also the prospect of border hold-ups,

with a “reasonable worst-case scenario” report by the Government’s Border and Protocol Delivery Group forecasting queues of 7,000 lorries in Kent and two-day delays to cross into the EU. Ian, who is also worried about the longer-term

reputational damage for UK plc that may force European firms to trade elsewhere, says: “At the moment, we can do next-day deliveries to Romania but there could be delays.

‘If there’s no trade deal, the effects on our business are likely to be in a year or two’s time’

“We buy a lot of materials like aluminium,

polyesters and acrylics directly from countries including Belgium, Holland and Germany, so this would put into question the availability of those materials because a lot of them aren’t stocked in the UK. “This would likely go on for about three

months so we’d have two options – to put up with it and deal with the customer service issues it causes, or build up stocks. “Building up stocks creates additional

cashflow pressures to those we’re still facing from the fallout of coronavirus. MTM is relatively well placed in terms of low borrowing but many companies just haven’t got the cash available to build up stocks. If there’s no trade deal, the effects on our business are likely to be in a year

Sonia Baigent

There's fears over huge lorry queues in Kent after 1 January

or two’s time. For example, the car manufacturers are panicking about the impact on their supply chains, which are integrated across Europe, so if they decide the UK isn’t a good place to do manufacturing, some of the companies we supply to will have less work.”

THIS IMPACTS JOBS and livelihoods. MTM has already made five people redundant, taking its workforce to 41, and there will be another review before the end of the Government’s Job Retention Scheme on 31 October. Ian doesn’t expect business to reach pre-

Covid levels until the end of 2021 and plans to invest in capital equipment, rather than people, to bolster productivity. “It’s hard but we need to remain competitive

and protect the jobs of the majority,” he adds. MTM’s story could likely be repeated across large

swathes of the UK and East Midlands economy. The region’s May to July unemployment rate

rose by 0.7% – the UK’s second largest increase – compared to the previous three months, reaching an above-average 4.4%. Sonia Baigent, owner of Assist Business

Consulting and a board member of the Leicester and Leicestershire Local Enterprise Partnership (LLEP), works with SMEs. “From what I’m seeing, Brexit and coronavirus

aren’t necessarily the problem,” she says. “It’s the uncertainty of both. Particularly in manufacturing, Brexit is a much bigger problem than Covid-19, which just amplified the issues that were already there in industries like retail and hospitality.” While Sonia predicts opportunities for sectors

like food manufacturing, she admits these won’t be able to take advantage until they know the costs involved. She adds: “It means a lot of businesses are

trying to have two completely separate plans. While they don’t want to incur too many costs by being driven too far down one of those avenues, we’re getting to the point where we don’t have a choice and have to take those contingency plans all the way. The businesses that survive will be those that are quickest to react.”

WHILE LOCKDOWN AND social distancing has given a kicking to bricks and mortar retail and hospitality, the accelerated shift to e-commerce has at least stimulated the burgeoning logistics sector. This provides much promise for the East

Ian Greenaway

34 business networkOctober 2020

Midlands given its central location and emergence of East Midlands Airport as the UK’s busiest pure freight airport, handling more than 370,000 tonnes of flown cargo every year – second only to Heathrow for annual tonnage of all cargo.

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