Factories stockpile materials ready for no deal
Fear of 10pc rise in costs if trade barriers imposed
MANUFACTURERS IN Yorkshire’s industrial heartlands are stockpiling materials in anticipation of a ‘no deal’ Brexit, after new figures showed that trade barriers could impose costs on companies as high as 10 per cent.
Business leaders in the Sheffield City Region said that failing to secure a deal ahead of Britain’s departure from the European Union on March 29 would hamper the city’s competitiveness.
They admitted firms are currently reining back on investment and innovation in favour of providing short-term protections against the damage that a no-deal scenario would cause. The situation was so acute that storage space for raw materials was already at a premium in Sheffield.
Company bosses say that a clear picture of what future trading relations with the EU would look like was essential to their ability to plan for their future.
Prime Minister Theresa May’s withdrawal agreement is expected to suffer a heavy defeat in the House of Commons on Tuesday and, despite the majority of MPs saying they would not allow the UK to leave without a trading deal, fears are mounting that it would be impossible to strike a new arrangement ahead of the scheduled departure date.
New data shows the extent to which South Yorkshire’s export market is heavily dependent on the EU, with 57 per cent of the value of all goods going to the union, meaning large areas of the county’s economy are exposed to the negative effects of potential increased delays and tariffs.
South Yorkshire’s business and political leaders will meet on Monday to discuss the region’s preparedness for failing to reach a deal.
Richard Wright, the chief executive of Sheffield Chamber of Commerce, told The Yorkshire Post that “most businesses are expecting disruption” with many being given ultimatums by customers on the continent.
He said: “I am talking to businesses in Sheffield quite regularly and they are stockpiling goods.
“It is giving them real serious problems and giving them planning problems. Everyone is now in a situation where they are expecting the worst and anything else is a benefit.”
Mr Wright added that a
From Page 1. decline in the value of Sterling following a hard Brexit could help to offset some difficulties faced, but questioned whether it would be enough to mitigate the damage from no deal being reached.
“I cannot believe it won’t have an effect on the city’s competitiveness,” he said.
Nick Cragg, Master Cutler of Sheffield, said that leaving with no deal would be a “catastrophe” for many firms.
“Business wants the Government to make a decision on where we are going and to plot the course ahead. But a hard Brexit is not the preferred option for most. Inevitably with any range of business models, there are some which will be much more harder hit from a hard Brexit. For some it is going to be catastrophic. Overall for manufacturing businesses, it is not good news.
“Inventory levels in some areas are being increased to reduce potential impact, but that will inevitably only be a short-term stop-gap. You can’t build infinite amounts of inventory and the costs of storing them. It is a Band Aid solution that some companies are taking or being asked to take by customers. There has to be a political solution to this and one that is good for business.”
Mr Cragg quoted figures for 2017 showing that exports from Yorkshire firms to the EU stood at more than £9.6bn, with the next biggest block in the United States standing at £2.2bn.
“It is not a quick swap that will be alright in a quarter or two,” he warned. “Manufacturing businesses in the region are inevitably part of supply chains. After March 29, they need to understand what that environment looks like.
“If there are tariffs, if there are delays at borders, if there are logistic implications, inventory implications, lead-time implications and so and so forth, that is not good news.
“What business does need is some understanding on where we are going and we need the politicians to lead the way on that.
“Business can have their voice, but ultimately this for the politicians of all parties to sort out and that is what they need to do.”
The Sheffield City Region’s Mayor Dan Jarvis added: “Even though it’s a matter of weeks away, nobody really knows what a post-Brexit Britain might look like.”