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Are your material supplies Brexit-proof?

Binyamin Ali

Without wishing to come off as CN’s Brexit columnist, the growing unrest among businesses over the Brexit process is hard to ignore right now.

The current burst of panic was triggered last Friday when Airbus said it would have to consider leaving the UK in the event of a Brexit no-deal, fearing a disorderly exit could cost it billions.

Airbus has more than 14,000 UK employees and supports more than 100,000 jobs through its supply chain.

This was followed by a joint statement issued on Monday, signed by bodies representing the likes of Facebook, Nissan, Bombardier and Coca-Cola, warning of a risk to £100bn of trade if Brexit is mishandled.

German car giant BMW added its two cents the same day, warning it would be forced to close its UK production sites if car parts struggle to make it through customs post-Brexit.

Then it was the construction industry’s turn.

Yesterday United Living chief executive Ian Burnett said the social housing specialist was considering stockpiling materials.

“It’s the what if scenario; what if the borders go up and suddenly the materials you want are on the other side of the Channel and we can’t get them over?” he told CN.

For the physical asset businesses at least, this has been the recurring theme.

BMW’s concerns relate to the free movement of materials and components across the Channel, while Airbus also said it was considering stockpiling materials worth billions of pounds as a means of protecting its supply lines.

So then, are these all just lobbying tactics or should the construction industry be more concerned about its materials supply?

The Construction Products Association estimates that only 20 per cent of materials used by the sector are imported, with 80 per cent being produced domestically.

That 20 per cent is, of course, still a significant proportion. And in addition to ease and continuity of supply, material prices could be just as critical an issue post-Brexit. 

Price increases have been recorded in recent months, primarily driven by the depreciation of sterling against the euro.

I’m no foreign exchange expert, but a further knock to sterling seems a reasonable possibility when Britain finally withdraws from the EU in March next year.

At the same time, international trade secretary Liam Fox and his department are limited in what they can do to establish trade agreements with countries outside the EU, agreements that could potentially fill in any supply problems after we leave the union.

All of which means contractors with European suppliers might well have to consider planning ahead now a la United Living and Airbus.

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