There’s just 50 days left until Brexit day, March 29th, and as it stands right now it still looks as though the UK is going to leave the EU without a divorce settlement in place. I’m not going to go into the political debate as to how we ended up here, it’s too late for that now anyway. Would be wasted pixels.
What I am going to explore however is the material problems our industry could face in the days and weeks afterwards. And when I mean material, I mean material.
Supply of raw materials
An issue that seems only now to be talked about is the supply of the very raw materials our industry needs to actually produce what we all sell and install. I’m talking about the resin made to make PVCu extrusion. The glass that does in every window and door. The timber that goes into timber windows and doors as well s some composite doors.
Should the UK leave the EU without a deal in place, that is going to throw up some serious question marks as to the guarantee of supply of our raw materials. A lot of the resin for PVCu comes from Germany. A lot of the raw glass comes from various regions of Europe. A lot of timber comes from Scandinavia. Should things get messy between the UK and EU on a trading basis after March 29th, it’s not clear as of now that the UK industry will continue to have good supply of these products. It is within the realms of possibility that we could go weeks without supply if solutions, even only temporary, aren’t found.
The question then turns to how much stock extrusion companies can hold. For example, how much can our systems companies based in the UK hold? I have been told that in some cases it’s only a weeks worth of supply. Maybe a bit more, but not enough to keep production going. The same goes for glass and timber supplies. Say it’s two weeks at best. If we have disruption for as long as the US Government shutdown, which last for about 36 days or so, we could be weeks without supply of these vital materials. In the worst case scenario, we could actually start to run out of resin, glass and timber. That is a scenario neither the UK or EU exporting countries wish to see.
That might sound dramatic, but there is a distinct possibility of that happening. Remember, with no-deal there is no transition period. During the transition period existing trade agreements would remain in place until a new trade agreement could be formed. But we won’t have that come March 29th if we leave without a deal being passed in Parliament, which right now looks about as likely as the DFS sale actually ending this Sunday.
What I would hope is that the companies that can have started to stock up on materials to help them see the first couple of weeks through. Just as some hedged just before the EU vote in 2016, hopefully the same has been happening now. But, you can only stock so much. Space isn’t infinite.
If you are a company who might be affected by this, it would be good to know via the comments section below what plans you have put in place to try and combat this potential worst case scenario.
Find UK supply
My personal take on all of this is that this is a lesson in which not to put all your eggs in one basket. You never know when the status quo might change, and it can leave you looking very vulnerable. In this case, we source much of what we use from the EU and make very little of it here. Great whilst that paradigm remains. But when change occurs, as it is doing here, it exposes massive vulnerabilities in having to rely on other countries and not being able to sustain your own domestic economy yourself.
We should have always had more float lines in the UK. We should have had more resin production facilities. We should have had more sustainable forests in which to grow quality trees for timber use. But we haven’t, and the infrastructure we have now wouldn’t be enough to cope with all domestic demand if the supply from Europe ground to a halt.
That being said, whilst there is a sliver of time left, companies who can seek out UK supply of the goods they need should be doing it now. Try and put into place supply deals that start around Brexit day and last for a good 3-6 months. It may not be a permanent solution, but anything that could help reduce the disruption to the supply chain would be helpful.
On a wider point though, should this not serve as a lesson and also an opportunity to expand domestic product of the materials our industry needs anyway? It would give us a chance to protect our own supply chains as well as have a chance at exporting to other countries around the world as well as the EU area. It would be a job creator, help boost local economies, raise product standards through quality British manufacturing. Although the news around this is all a bit doom and gloom, there are always opportunities to make the most of and this is it.
Do you think the supply chain will be disrupted in a no-deal scenario? Will a deal be done at the very last minute to keep things moving? All comments and thoughts welcome via the section below.
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