DGB Brexit: The Interviews is a special series of written interviews with business leaders across the UK fenestration sector about the single most important issue to date: Brexit.
As we head towards March 29th, Brexit day, I will be publishing a series of special interviews with business owners and leaders from all parts of this industry to gauge the opinions of those at the very top of business, and to discover if our industry is prepared for life outside the EU, whether we strike a deal with the political union or otherwise.
This is the first, and I am happy to say that Joe Martoccia, CEO of Aluminium Shapes Ltd starts this special series off. It’s a series of ten questions, and every business leader will answer the same ten questions to maintain an unbiased platform and to gauge the differences between people and sub-sectors within UK fenestration
Debate and comment is encouraged, but keep it clean!
Joe Martoccia – CEO Aluminium Shapes Ltd
- How did you vote in the EU Referendum and was the result what you thought it might be?
I voted remain and was expecting a remain victory
- What are your thoughts on how the negotiations have progressed and do you think a deal will or won’t be done in time?
In a negotiation, there are two (or more) sides, the best outcome is a Win/Win. Our approach has been beyond arrogant, the EU is a club with defined rules, regulations and laws. We have in effect said, we don’t want your rules or to pay the club membership, but here is a list of the benefits we wish to keep enjoying……………and we are shocked when they say NO! try it at your golf club, gym, football club etc. see what response you get.
- How has the EU referendum vote and it’s effects impacted on your business?
Whilst personally I am against Brexit and see some serious issues with our macroeconomy going forward, our business has benefitted significantly since the vote. We are in a market where imports serve 50% of the UK demand, so a lower value of Sterling has made us more cost competitive against imports. There has also been a degree of onshoring from companies looking to secure their supply chains, particularly in automotive, rail and road transport.
- How would you say your business has performed since the time of the vote?
As you know we acquired the business in early 2017, undergoing a transformation with investment in plant, people and processes. Consequently our improved performance is due to a number of factors, as per the previous point, Brexit has helped us.
- With Brexit day just a few months away, what plans, if any, have you put in place to ensure a smooth transition on March 29th?
Around 15% of the Aluminium Shapes team is made up of EU Nationals, understanding their future status in the UK is of paramount importance to us, it appears that there will be no or little effect on them. Having said that, we lost one of our shift supervisors soon after the vote, he and his family returned to Portugal.
We export around 5% of our production to Europe. Frictionless trade is key to us, as the country doesn’t have a trade deal with the EU, there is little we can do but sit and wait.
The majority of our aluminium supply comes from the UK so no issue there, although the supplier does import a percentage of raw aluminium from both EU and non-EU countries. They are a Global producer and assure us that they will have things covered.
- Putting aside your own voting preferences, do you see a path forward where your business and the UK as a whole can still continue to be prosperous?
I think the no deal Brexit scenario could have some catastrophic impacts on the UK economy, predictions of sterling dropping below the Euro and possibly close to parity with the Dollar would force rampant inflation. Whilst the impact maybe short-term, I see a deeper issue with an impact on GDP if there is to be a mass exodus of manufacturing and service sector jobs to Europe. This will force a recession that would make the 2008 recession due to the credit crunch look like an insignificant blip.
- Would you like to see a second referendum on the terms of any final deal, inclusive of an option to go back to EU membership?
I believe that we are so far away from a final deal that the only terms of a second referendum would be:
- Continue with Brexit towards Armageddon
- Reverse this catastrophe now for the future and prosperity of our country
- Should there be another General Election after Brexit day, given the precarious nature of the current Government?
There should be one before, Theresa May went to the polls to get a “clear mandate” for her Brexit deal, which resulted in a tiny majority, largely because the other parties followed the same principles. A coalition of centre affiliated MPs with a promise to reverse Brexit could win…………..but that will never happen.
- What do you think the biggest impacts of Brexit are going to be on the UK fenestration industry in the years to come?
We now that new build and home improvement spend is directly linked to confidence in the economy, job security and disposable income. Should the effects of Brexit force us into recession, no matter how short and sharp, there will be carnage. This is largely due to a number of companies in the sector with high borrowings and gearing. If demand drops and interest rates rise, then servicing debt for a number of companies will range from difficult to impossible.
- Should the UK fenestration sector see this as an opportunity to help grow it’s own domestic industry i.e. fabrication, training and apprenticeships, exports etc.
The industry should be doing all of that as a matter of course. I see it as unrelated to Brexit.
A final word, those of you who follow me on Social Media will now my views on Brexit. There are elements of the EU which I do not agree with – Federalism, ridiculous controls, some of the law making. However, as an Economic bloc, it is a strong force in the Global economy, losing elements of that are the biggest loss for me. Standing alone in today’s Global economy is a daunting thought.
Staying in and forcing EU reform was by far my preferred option, as a Nation we never fully embraced the EU political system, we sent our “B” team to Brussels, electing our best politicians for Westminster. I guess we all know the identity of our local MP, but how many of us know our local MEP? We sent Nigel Farage to Brussels for years for Heaven’s sake! I rest my case.
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