Brexit not a source of worry for North-East businesses

THERE is now only a year to go until, one way or another, Britain leaves the European Union. The Chamber has been working and engaging with members across a variety of sectors since the result to identify challenges, and provide practical Brexit solutions. Note: thorough research has found throwing fish into a river does not help, surprisingly...

The North East England Chamber of Commerce highly recommends that businesses start forming Brexit contingency plans to deal with possible Brexit scenarios. Three strategies should be considered a minimum, dealing with a soft, bespoke and no deal scenario each. This would allow businesses, when the details of the deal become clearer, to smoothly transition into the post-Brexit environment and avoid any deadline day chaos.

Over the last few months, the Chamber has identified four key areas that businesses must address in their preparations for Brexit: Cross Border Trade, Intellectual Property, Taxation and Workforce. These are the most prominent themes to have emerged from Chamber members, and form part of our Brexit Checklist which is designed as both a litmus test and start point for Brexit preparations.

Changes to cross-border trade will prove a major headache for currently exporting businesses.

Chamber customs specialist, Jacqui Tulip, gives her view:

“Currently exporters of goods to the EU and importers of goods from outside of the EU must by law organise a customs declaration which advises details of the movement of goods to HMRC. Traditionally this is arranged for them by their forwarder/customs agent with a fee attached.

“When the UK leaves the EU, all intra-EU trade will also be subject to customs declarations for the first time and the onus will be on businesses to ensure that the declaration is done. This will come as somewhat of a surprise to the estimated 130,000 businesses which currently trade intra-EU only.

“The language of international trade is peppered with jargon and acronyms, so there is a lot to learn in a short space of time. However, the consequences of getting customs procedures wrong (HMRC fines and penalties for non-compliance etc.) fall squarely with the trader and not their freight forwarder. Cash flow is a real problem for global traders as the costs of custom documentation and VAT, as high as 20% for importers in a hard Brexit, could cause a financial headache.

“We host a number of educational training programs with the Chamber to help businesses understand new custom processes and documentation, as well as supporting businesses achieve Authorised Economic Operator (AEO) status. We’re always looking to help our global business community, and now is a very good time to think about learning more about international trade procedures if your business is involved in cross border trade”.

Some Chamber members, however, are staying ahead of the competition by already starting their Brexit preparations. Though the details of the final deal are still unclear, the following members talk about making the best of a vague situation, and what steps they're taking to be Brexit Ready by 2020.

Mike Matthews MBE, managing director of Nifco UK Limited, on preparing in an uncertain environment:

“For Nifco, the key to post-Brexit success is making the necessary preparations to ensure that when March 29th 2019 comes, we are primed and ready for the competition in the marketplace.

It’s too early for us to talk with any real degree of certainty, but preparing for the unknown means ensuring the business is in optimum condition to undertake whatever challenges lie ahead and for Nifco that is achieving the best standards of quality, the best operational efficiency, lowest possible costs and attracting and retaining the best skills.

Businesses hopeful of trade agreements have, in the past, been accused of clutching at straws, but my answer to this, as I have said before is, through our preparations, we are using those straws to build a good and solid raft”.

Lukas Passia, managing director of Tea Venture Limited, on the benefits of being proactive:

“I remember really well my attendance at an event last month, organised by the North East England Chamber of Commerce, under the topic 'Brexit - 1 Year to go'. Local businesses shared their opinion about potential implications for their companies and for the region. Overall, I enjoyed the event as the speakers tried to motivate their crowd. However, I felt that the room was still full of uncertainty and even fear of what is going to happen.

We have a different approach here at Tea Venture. There is a bit of uncertainty, no doubt about that, but certainly no fear or a 'Give-Up' mentality. Considering that Tea Venture is a company managed by two Germans who employ one person of Romania and one of Ireland, a company that is sourcing majority of parts from outside of the UK but manufacturing in the UK, and a company that has now started exporting to Asia and is about to enter the European market.

We could be worried, concerned and full of fear. But we are not. The time ahead is better to be spent in preparation for any possible scenario and there is support available from the Chamber, from the Department for International Trade, from lawyers and other sources to prepare yourself. At any time full of uncertainty there will be losers and winners. Prepare proactively and you enhance your chances to be on the winning side”.

Ralph Saelzer, managing director of Liebherr-Sunderland Works Ltd, comments on the Brexit skills challenge:

“Next to the effects of potential tariffs and the additional administration linked to, Liebherr Sunderland Works Ltd have identified skills as one of the crucial areas to prepare for.

We benefit heavily from the existing free movement of labour within the EU. We manufacture maritime cranes of the highest quality standards and depend on the exchange of expertise between the sister plants in Germany, Austria, Ireland and Sunderland. For this we transfer personnel between the factories on a regular basis and very short notice.

As it seems very likely that the free movement of labour in the present form will not be possible anymore, and after leaving the EU we use all available options to upskill our workforce.

Alongside our already very strong and successful apprenticeship programme we’ve utilised the opportunities of the Apprenticeship Levy scheme. We have added additional trade programmes and offer mature apprenticeships and degree apprenticeships to our workforce.

In co-operation with a local college a Lean Management apprenticeship for our supervisory staff has been set up and a number of others have signed up for a Degree Apprenticeship with the University of Sunderland.

As a levy payer the costs will be covered by the levy pot and in case those funds are exhausted businesses can use the 90% contribution from Government.

We see this as a potent tool to counteract potential implications from leaving the EU.”

n To help create a global North East, it is vital that businesses begin their Brexit preparations now. In this endeavour, the Chamber has produced a Brexit Checklist to prompt businesses to start thinking and identifying Brexit issues most relevant to them. Then, in co-operation with Square One Law, the Chamber is launching a Brexit Ready: Supply Chains project next month, which will provide practical advice and insights in preparing business supply chains. For any businesses keen to get Brexit Ready, the Chamber is always here to help.