Rick Smith, Forbes Burton MD, on how companies can prepare or deal with the coming aftermath of Brexit
Brexit has been a slow-motion wave of uncertainty for many since the day of the referendum results back in 2016. Few could have imagined we would be at the impasse we currently find ourselves at.
There’s a widespread air of dejection at the moment, having passed the original Brexit deadline, the UK is now at a strange hinterland between a deal needing to be struck and a no deal scenario being accepted.
Of course, none of this helps the day-to-day. In fact, it is unhelpful to businesses who are now wanting to prepare for the next year and is proving to be a real hindrance, particularly for manufacturers.
Rick Smith, Managing Director Forbes Burton
An immediate potential area where manufacturers across all sectors —be it pharma, food or technology— may struggle is that there may be a significant reduction in demand for various goods that may be considered in any way luxury. This is down to a catastrophic combination of declining consumer confidence and overall economic uncertainty. That may lead to dips in revenue, which of course may have subsequent effects for the rest of the industry.
Increased tariffs and further trading complications in complex supply chains could drive up costs too, meaning components, raw materials and associated services are all impacted. This, of course, is not helped by the devaluation of the pound, which also drives up the cost of materials.
The uncertainty also causes problems with human resources too. With fewer skilled foreign nationals seeking work in the UK, it could drive up labour costs and start to make the recruitment process much slower.
In manufacturing, there has always been a call for those with relevant skills. The focus here has always been on attracting and retaining those with core talents, essential to processes and innovation. We are now in a peculiar position where the least skilled may well become the most valued.
It must also be said that decision making has become much harder since that decisive day three years ago. Economic instability often deflates any confidence and so this makes it harder to make business decisions.
It’s not all doom and gloom though, there is a lot to be said for diversification and adapting to a changing market here. If supply chains have not already considered becoming more lean and efficient to offset any cost increases, then now is the time. Now, every aspect of the business needs to be reviewed and justified.
Another positive is that Brexit affords UK firms the chance of employing workers from outside of the EU. Too often it is forgotten that there is a whole tranche of talent that exists outside of the EU’s borders. To miss this opportunity to extend companies’ reach could be short-sighted in years to come.
There is, of course, also the chance for firms to increase in size in the UK. With the amount of business that will need to continue within our shores, Brexit could well be a blessing in disguise. This could be a trigger for more innovation to take place.
It’s often said the best art is made during times of uncertainty and pressure. Could the same be true of manufacturing? Only time will tell.