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Brexit readiness: what can manufacturers do now?

Business hates uncertainty (so do most people for that matter). It’s a particularly uncomfortable and uncertain time for the UK manufacturing industry in the face of Brexit ambiguity. Manufacturing, in particular, will be seriously affected, and UK trade associations have already warned the government that uncertainty is slowing investment and leading to lay-offs in the sector. We all want to know what the impact will be on our business and what we need to do to prepare for it.

But not everything is uncertain. Many times, it’s just the details that are unknown. Despite being in the midst of a thick Brexit fog, there are things every organization can do now to prepare. For example, if you have an extended supply chain across Europe, you’ll need to make sure you can comply with any new regulations, as well as re-visiting all contracts with your suppliers and customers in Europe to ensure you can work to the letter of the law around new trading agreements.

Brexit threats and opportunities in the automotive and aerospace sectors

As Director at Birmingham City University’s Centre for Brexit Studies (CBS), it’s a topic close to my heart, and the subject of an interesting new research study. The CBS has teamed up with OpenText to provide the first granular micro (company-level) assessment of the potential impact of Brexit on the automotive and aerospace sectors in the UK. We will look at the impact, threats and opportunities on these two specific industries around Brexit.

Together, the automotive and aerospace sectors contribute £23.3 billion to the UK economy – excluding revenue generated within their supply chains. They reflect many common issues around supply chain, trade barriers, and HR, which are indicative of challenges facing the wider manufacturing sector as a whole.

For example, Honda® recently addressed the UK Parliament, telling MPs that it imports two million components daily into the UK from Europe on 350 trucks, and holds about one hour’s worth of stock at any given time as part of its Just In Time inventory system. The automaker said that it would take 18 months to put proper customs administration in place, and that every 15 minutes of delay would cost the company £850,000. It also pointed out the 40% of workers required to build its new Honda Civic model in the UK were EU nationals.

Regulatory change?

With stakes this high, no manufacturer can afford the luxury of complacency. Whilst we don’t know the exact details of the final Brexit negotiations, we do know that the Government’s stated desire to leave the Single Market and EU Customs Union would significantly change the operating environment for UK PLC. It’s highly likely then that the UK companies will have to institute enhanced records management requirements as part of leaving the EU. Likewise, companies should re-assess their information governance strategies to facilitate the process of transition, as well as audit their HR procedures to ensure they are able to comply with any new registration and reporting requirements associated with employing overseas workers.

UK companies should also be communicating with their supply chains and customers to work with them to be quickly aligned if or when changes come to minimize disruptions and maintain supply chains as frictionless as possible.

There are fundamental steps manufacturers can take today that will better enable them to act once the full disclosure of changes and implications becomes clear.  Manufacturers must begin plans for Brexit now, and create ‘business as usual’ scenarios in order to continue much needed investment in technology, efficiency, agility and innovation.

I’ll be addressing these issues, as well as providing further insights into the CBS research at the upcoming OpenText Innovation Tour London on 12 April at the O2 Intercontinental Hotel. I’ll be taking questions, as well as discussing wider Brexit sectoral implications. You can register here.

OpenText has also created an information Brexit microsite to help you understand the issues surrounding Brexit and begin to prepare for the change.

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