Brexit means Brexit!
Ok, so Brexit Means Brexit! Finally, the May government breaks their silence although beyond a loose date of early next year, there are still no real plans. There is however, plenty of posturing from Euro Leaders as they gather together in this Conference Season; statements from various podiums that that negotiations won’t be easy for Britain.
It's still clear that we’ve all got some learning to do; what’s the Customs Union, what’s the Single Market, what are Rules of Origin? We’ll look in detail to those in later blogs. For today though, we’ll look to a recent discussion on Radio 4’s ‘The Bottom Line’ (Check it out on IPlayer) Evan Davis led a discussion with the Head of Brexit for KPMG, a Senior Vice President of Tate and Lyle Sugar, and a Partner of Herbert Smith Freehills (HSF), a Law Firm looking after Mergers and Acquisitions.
The guests had diverse views on Brexit, with Tate and Lyle seeking to maximise the opportunities of Brexit because of the potential freedoms that we could gain from EU trade policies. The other two guests look after clients who have differing interests, some of which are risk and some opportunity.
What the guests all agreed on is that the government are going to have to deal with a range of needs from businesses; the Sugar business is struggling with the current trade agreements so is keen to break free, while other sectors have built their business on the current EU trade regulations and will struggle in a new ‘world’.
Plan your 222!
The three guests all agreed that a plan for their business was crucial. The lady from KPMG said they were suggesting a ‘222’ plan; What’s your plan for the next 2 weeks, 2 months, and 2 years? Looking in this way will help you break the potential issues down by analysing your exposure, assessing your options, and deciding how to address them.
Tate and Lyle had a team that spent several days behind closed doors looking at their supply chain, their customers and other factors that make up the business. They assessed what alternatives might exist- for example, if a supplier in the EU becomes more expensive because of tariffs, are there alternatives for supply, or procurement practices? A sage piece of information was they looked at the full supply chain and assessed all the elements. (We would know that as Time, Cost, Quality- how could those variables in your processes be changed?).
Of course, some supply chains are very complex; in the example of cars, some parts of the car might be made in Eastern Europe, some in France or Germany, and the final car might be made in the UK. Until the negotiations start, we don’t know how that will look if the current trade situations change?
Some things that the group considered was how to invest in machinery: what do your customers buy? Can you supply products in formats that your customers will be able to buy? Tate and Lyle were considering sizes of packing lines so they are able to supply products in formats they may pay less tariff on? What would the length of contracts be – how are your contracts that go beyond 2019 look in the event of change?
An immediate concern for many organisations are changes to Personnel rules. Questions and issues have already been asked about Exit clauses for people, contracts which include training agreements and situations to be resolved if people leave a contract early, alternative places of work, and employing from international sources – would an Australian be able to move freely around the EU if they work here.
More questions than answers!
The discussion raises more questions than answers of course. The current situation is still very fluid as the negotiations haven’t started yet, but clearly, the resounding advice from people seems to be ‘Plan, Plan, Plan’.
We hope you have found this blog helpful. Next time, we will be looking at our export markets and asking if we’re opening up the world markets, who are our likely trading partners going to be? What have we got to sell that might interest someone sitting in Mongolia perhaps?