Local News story

Getting ready for Brexit

Wednesday, 20 March 2019 ( #915 ) - EUROPE
The Brexit deadline is approaching. PHOTO: PIXABAY
The Brexit deadline is approaching. PHOTO: PIXABAY
By Allan Leibowitz

It is most unlikely that the United Kingdom will leave the European Union next week as initially agreed. As we finalised this newsletter, British prime minister Theresa May was reportedly asking the EU for a delay to Brexit - but any postponement will have to be agreed by all 27 EU member states.

The materials handling sector has been opposed to Brexit since it was first announced, and the opposition has not diminished as the deadline approaches. But at the same time, manufacturers have been getting ready for the challenges ahead.

Among those most affected by the looming changes is Irish manufacturer Combilift. Managing director Martin McVicar notes that the UK accounts for 25% of his company's sales. It is so important, he says, that Combilift treats the UK as a "home market".

"Another area of concern is the whole supply chain," he adds, especially because Combilift has many subcontractors including a number in Northern Ireland as well as suppliers from mainland UK.

"Over the past six months, we have sat down with every one of our UK suppliers individually and asked them to show us their supply chains," he says. This process has uncovered that many components are sourced from Europe, "and we have already rerouted some of those goods".

McVicar's biggest fear is a hard Brexit (departure without a negotiated solution) which, in all likelihood, would be accompanied by WTO tariffs, currently 4.5% on forklifts. "So, our products could cost our UK clients 4.5% more, but also the components that we are buying in from the UK will cost us 4.5% more," he says.

In anticipation of Brexit, Combilift has applied to Irish customs for special status which will allow parts and components to travel across borders more freely, without inspection delays.

A further worry is the 62 employees at the Monaghan site who live in Northern Ireland and will potentially have to cross a border each day to go to work. There is also confusion about where they will be taxed and where they will pay their social insurance, he explains.

Forkliftaction News also discussed Brexit with Jungheinrich director Lars Brzoska at the company's Hamburg head office.

"I still hope that there's going to be a good end to the whole nasty process because it not only has an impact on our business, but it's a lose-lose situation for the EU and for the UK," he says.

Brzoska describes the UK as one of his company's four big markets. "On the one hand, it is critical because it would have a big impact if it (falls) 30%, 40% or 50%, but globally speaking, it would not be critical because we have a substantial portfolio around the world," he says.

Jungheinrich has been preparing for some time; firstly, by trying to get sufficient stock into the UK "to bridge the critical time after a hard Brexit". Jungheinrich's large rental fleet in the UK could prove invaluable if imports become complicated. Because Junheinrich only builds to order, there has been no effort to stockpile new machines in the UK market in anticipation of Brexit.

Jungheinrich is also increasing its supply of parts at its Birmingham distribution centre to ensure that customers are not disrupted, according to Brzoska.

These two companies - and many more - will be closely watching developments in the next few days and weeks.
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