Manufacturing companies in the UK have faced numerous challenges due to the current global events. With global lockdowns and travel restrictions, the movement of goods has been severely affected. The ongoing pandemic has brought about numerous changes in the way companies conduct business. One of the most significant challenges that manufacturers in the UK face today is the challenge of customs import and export. After weathering a perfect storm of Fukishima melt down, Brexit, Suez Canal, COVID-19 and now conflict in Ukraine with Russia, never before has international trade been so fraught with issues for UK manufacturing.
Brexit:
The UK's exit from the European Union has resulted in a massive overhaul of customs processes. With Brexit, manufacturing companies in the UK have had to adhere to new rules and regulations that govern the import and export of goods. These include customs declarations, VAT payments, and new tariffs on goods imported from the EU.
Custom Checks:
Manufacturers in the UK will need to prepare for increased customs checks and paperwork when importing and exporting goods. Customs border controls are being introduced to monitor goods crossing the UK-EU border. This will lead to delays and increased costs for businesses. Manufacturers will need to ensure that they are prepared to handle these new customs checks to prevent their businesses from incurring extra costs.
Tariffs:
With the UK now being outside of the EU, it is no longer part of the EU's single market and customs union. This means that tariffs will be applied to goods imported and exported between the UK and the EU. The introduction of tariffs could lead to price increases for consumers and reduced profits for manufacturers.
Delays:
The pandemic has led to delays in shipping and logistics around the world. This has had an impact on manufacturing companies in the UK, with many experiencing a shortage of raw materials or finished products. The introduction of customs checks and border controls following Brexit will likely lead to further delays in the import and export of goods.
Mixed fortunes: Knock-on effects to manufacturers
Inevitably manufacturers in the UK have borne the brunt of these impacts and today a group of senior business leaders came together to discuss this at a recent best practice round table; participants were Jennifer Hughes, FD at Transicon Ltd, Phil Stanley, MD of TWP Group, Tony Mercer, MD of EDM Plus, David Chappell, MD of Crompton Controls and David Burck, International Director of Amco.
Despite a (not so reported) fall in the cost of shipping container prices from the far-east, which sits at near lowest ever levels of $3,000 per container, (versus the $20,000 per container we saw during the global pandemic), manufacturers appear to have had mixed fortunes on the impacts to their businesses.
Ripple effect means increase prices
In most cases, UK manufacturers on the panel have to pass cost increases onto customers, imposed by import tariffs & duty for two reasons; first is a ‘surcharge’ added to the costs of goods they are buying of around 5% across the board and second on the delays of certain components from Germany of between 6-8 weeks resulting in penalties or stretched payment terms.
Stockpiling of inventory
Cashflow in manufacturing is ever precarious, so the additional spend manufacturers have had to front in order to stockpile materials and components has not been a welcome change to a business’ cash flow forecast. Exotic materials imported at a premium from abroad have particularly hit manufacturers harder in the pocket.
Not all bad; Unexpected increase in orders
Almost all participants despite these challenges have reported an up-turn in business where dormant customers who in the past had moved their business away for a 10p saving have now come back for support from a local alternative. For pallets of goods held up in port by French authorities, suddenly the UK has been seen to be a more competitive alternative to overseas supply. Its an advantage that Made in Group encourages its manufacturing members to press home, with the support of a world class local supply chain on its doorstop.