manufacturing 66


The deal enables a degree of equal recognition but that only works when standards are compatible. As soon as they start diverging, you’ve got extra costs to business


The full impact on procurement and sourcing


The overall challenges posed by the pandemic and other contributory factors have made it difficult to measure the full impact of Brexit on manufacturers’ procurement and sourcing practices.


However, Make UK has found from member feedback that raw materials, particularly commodities, have been challenging to procure.


“Some of this stems from trade policy, some from business models and disruption to them, and some of that is from difficulties in the global supply chain,” explains McReynolds.


“The areas which we would be watching most closely are how the conversations around customs facilitations develop in the future with the EU; how the regulatory market is mapped; and how we anticipate any change to that from either side.


“What I would be worried about is unforeseen disruptions to supply chains. Something, all of a sudden, that is not available due to the way that the TCA has evolved.”


Bailey believes the shift to Industry 4.0 could help deal with some of the Brexit friction. “That could resolve some of the issues around skills shortages that have cropped up again post-Brexit,” he says. “Investment in Industry 4.0 is a challenge but also part of the solution.”


Finding the key market innovations


As for market innovations, Bailey points to the work undertaken by Tom Leeson at Open Tech, who has been working with manufacturers to digitise their supply chains.


“It makes it a whole lot easier to get the information you need for your customs clearances,” he says.


For Pizzey, a key priority is the creation of a system that provides third party delivered duty paid (DDP).


“We take on the onus of paying the duty and organising the documentation and customs clearance for the customer,” he says.


“We can recharge that but the point is not the associated cost, it’s the administrative burden.”


Pizzey warns that, if an EU customer is used to procuring products without documentation, customs clearance and associated costs, and suddenly they face import declarations, having to sign Power of Attorney documents or have to create a deferment account to pay the duty, customers will start to source from inside the EU.


McReynolds agrees it is inevitable that some European businesses will substitute UK products internally within the EU but does not believe that it will be as widespread as some commentators fear.


“The specialised nature of the manufacturing sector in the UK means that the products we create are high quality, high-value manufactured goods, so the ability to substitute them is slightly more limited,” he says.


What Make UK has seen is a move by some companies to set themselves up in both markets, and internalise the costs.


“In other words, creating an internal model for themselves where they take that cost out of their customers’ hands and handle that themselves. We’ve seen a lot of manufacturers explore that option,” says McReynolds.


Bailey welcomes the bounce back but warns trade is still down significantly.


“The point is, how firms reconfigure their value chains. That’s a long-term impact of Brexit, so we aren’t going to see that until the end of the year and in future years,” he says.


“The pandemic has had a massive impact, and hopefully there will be a rapid bounce back, particularly as we’ve progressed the vaccine. However, there isn’t a vaccine for Brexit. It is probably going to have a bigger impact long- term.”


Fergus McReynolds


David Bailey


Neil Pizzey 29


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