Huge scale of Brexit woe flagged by Scottish Engineering chief
EVEN the best-prepared companies with solid export and import experience have had to contact Scottish Engineering for advice on a raft of complex issues arising from Brexit, the industry body’s chief executive has revealed.
Paul Sheerin has meanwhile declared that, if the sector’s Covid-19 response has been a positive in the latest quarter, then the “reality of ending the Brexit transition period has been more than its balance”.
His comments come as Scottish Engineering’s latest quarterly survey, published today, shows an acceleration of the decline in overall order intake and exports in the sector north of the Border in the latest three months. Staffing fell sharply again, although this decline showed a deceleration from the preceding quarter.
Output volumes were flat overall in the latest three months, having declined marginally in the previous quarter.
Mr Sheerin said: “Manufacturers are once again having to show their resilience, as 2021 has started with further Covid-19 impact on confidence, coupled with the harsh reality of the end of the Brexit transition period.”
He added: “Of these two challenges, Covid at least presents a path out of where we are as vaccination programmes worldwide gain traction. Brexit impacts on the other hand need urgent attention and support from the UK Government to ensure that the detriment our customers in Europe are currently experiencing can be removed, and their essential business retained.”
Scottish Engineering noted companies’ predictions for the next three months signalled this period would see an improvement in the sector’s general performance, “with key indicators of overall orders and output forecasting measurable recovery”.
Writing in the quarterly report, Mr Sheerin says one reason to be upbeat has been “the support extended to the sector by our respective governments – the UK Government through extension of the furlough scheme allowing companies to offset losses and retain key skills, and equally the Scottish Government encouraging manufacturers to stay in operation whilst others unfortunately were asked to close”.
He declares: “This latter support was very welcome and was also more than earned through the hard work and innovation demonstrated by manufacturing companies applying every lesson learned in the use of effective risk assessment and management controls. The net effect of those efforts [was] the excellent reported levels of compliance from HSE (Health and Safety Executive) Covid inspections, demonstrating a sector able to rapidly adapt and remain fully in control of a challenging public health issue.”
However, Mr Sheerin adds: “If recognition of our sector’s Covid response is a positive this quarter, then the reality of ending the Brexit transition period has been more than its balance. Even the best-prepared companies with solid export and import experience have contacted us to seek direction [and] advice on complex areas of VAT, duty suspension, conformity assessment, country of origin rules and essential travel to support customers. Some of these rules were only clarified on completion of the UK-EU trade agreement, less than 10 days before the end of [the] transition period, and frankly the online guidance tools are not enough to help.”
The survey found 56% of the engineering companies operating in Scotland which were surveyed were experiencing detriment because of additional administration costs relating to customs and logistics processes postbrexit. Half of those surveyed were experiencing the detrimental impact of increased cost of logistics capacity for inbound and outbound shipments. Only 25% of engineering companies surveyed reported no impact from Brexit.
Mr Sheerin says: “The impact of this has certainly been increased costs in everything from transit costs to extra administrative burdens, and we have already reported that the major concern is late delivery to customers leading to a potential change to sourcing within the EU. The big question remains: are the issues merely teething problems that will settle down, or is this evidence of more systemic problems with the implemented solutions to Brexit?”
He adds: “The answer has to be a mix of the two, as there is no doubt that companies who never thought twice about sending or receiving goods from Europe have been on a steep learning curve, and there will always be room for efficiency improvements. There have also been clear examples that the training, resources and systems have inadequacies that need to be fixed as soon as possible. A final word on Brexit from [a] member company stated, ‘Brexit is a significant issue, poorly signposted and businesses [are] left to pick up the burden and the cost’.”
Brexit impacts on the other hand need urgent attention and support from the UK Government