The Impact of a no-deal Brexit on the fenestration industry
By Martin Thurley, group MD of Liniar.
The 2016 referendum seems like a lifetime ago and just yesterday, both at the same time.
Every day the media is full of warnings of a no-deal Brexit but not much detail about what that means. And as the October 31 deadline fast approaches for the UK to leave the EU, a no-deal scenario is quickly becoming a real possibility. The big question is: what impact will this type of Brexit have on the fenestration industry? And, more importantly, is your supply chain adequately prepared to handle whatever is ahead?
A no-deal Brexit essentially sees the UK severing its ties to the EU without agreements in place to handle trade, tariffs, customs and freedom of movement.
One of the biggest areas the fenestration industry will feel the pressure is the supply of goods coming in from EU member states. Without agreements, those who have not planned for delays and penalties will be stuck playing catch up, and risk a myriad of customer service issues.
It all starts at the top of the supply chain. UK-based systems companies need to be able to buy in their raw materials and components without delays and without high import tariffs. And systems companies based outside the UK will see similar issues when it comes to shipping finished profiles in from the EU.
As no-one really knows what will actually happen on October 31; it makes sense to have a contingency plan in place, and Liniar is already well ahead of the curve.
The Liniarsenior management team has been preparing for our eventual departure of the EU since the referendum result in 2016.
Since we import many of our raw materials from outside the UK, we recognised Brexit as a business risk early on, and since then we’ve been quietly making plans so customers face minimal disruption when Brexit finally happens.
A no-deal Brexit translates into an immediate exit from the customs union, meaning a halt in all goods coming and going between the EU and UK. This could result in extremely long tailbacks at the borders, tunnels and ports, goods piling up and extra checks on goods before they can come into the country. The customs union currently allows goods to move freely through the European states, but without it, exporting to and from Europe could take significantly longer.
Inevitably, we had to hope for the best but prepare for the worst. From the port authority in Antwerp to customs, and even government officials, we’ve spoken to everyone to ensure we’re in the best possible position.
We’ve looked at multiple sources for raw materials and bought in goods and, in most cases, this includes a UK provider. Where we’ve identified new sources, we’ve run multiple and comprehensive trials to ensure the quality of our product would remain unaffected.
Once we were satisfied our suppliers looked in a good position, we worked with them to do the same with their suppliers, so that there would be no bottlenecks of the goods required, which would cause production to cease.
For EU suppliers, we’ve worked with them to attain Authorised Economic Operator (AEO) status, which allows goods to be fast-tracked through the customs system, getting to their destination quicker.
Critically, we’ve invested an additional £2 million of working capital to ensure we have sufficient stocks of raw materials and finished goods to allow for initial delays at the end of October. This is a substantial investment, and one that our parent company Quanex has been happy to provide to ensure our service levels remain the best in the market.
This is all in line with Liniar’s overall philosophy of ‘doing the right thing’. At the end of the day, ensuring the continuity of the supply chain affects more than just Liniar employees and their families. Our ability to deliver on time, in full, affects the families of hundreds if not thousands of workers, and being as prepared as possible is the responsible thing to do.
We’d also encourage everyone in the supply chain to build their own stocks of critical components as much as they can before the leave deadline. Hope is not a strategy, and we’d rather be over-prepared than suffer potential disruption.