It’s time for SMEs to throw open their factory doors and educate MPs about the perils of Brexit before it’s too late writes Paul Murray, MD of UK SME Instrument Design Technology.
It’s over two years since the UK voted to leave the EU. It’s taken until a few days ago for the UK government to come to an agreed UK position for negotiations with the EU.
Simplistic arguments presented by Brexiteers show their lack of understanding
The Brexiteers have shown throughout the campaign and since a complete disregard and total lack of understanding for the manufacturing processes for industrial goods in the modern age.
In the automotive, aerospace and food manufacturing sectors to name but three of many; the requirement for integrated supply chains, just-in-time deliveries and seamless borders across Europe & Ireland are paramount. The cost of production is closely controlled and would be severely impacted by the potential of border delays & tariffs.
Simplistic arguments presented by Brexiteers show their lack of understanding of this process. Similarly, for common product regulations and standards these are set worldwide, and if you wish to sell into any market you have to show compliance – this is true for both large multinationals and SME suppliers.
The impact of the vote has been dramatic with a fall in market sentiment towards the UK
Perhaps Brexiteers would benefit from visits to JLR, BMW-Mini, Toyota etc. plus Airbus to understand the reality? It would be a breath of fresh air to hear informed comment from MPs, and certainly an improvement on the hugely negative recent comments by MPs and Ministers about business.
For our high-technology SME supplying precision instruments to the international science markets, the impact so far of the vote has been dramatic, with a fall in market sentiment towards the UK. Previous excellent working relationships between European partners and the UK supply base have suffered due to the perceived sentiment from the UK together with the huge uncertainty caused by the constraints of Brexit. This also seems to be the case with the Galileo project where UK suppliers are being frozen out of the procurement process.
The ease of doing business on our doorstep with European science laboratories cannot be underestimated- modern travel means short, efficient visits to the continent are possible. A common European culture with English as the language of choice further enhances the process. The ability to easily discuss and agree contract terms with Europeans is another advantage.
Contrast this with Asian markets, for example China, where the process is controlled by government with onerous conditions together with different language and culture. The distances involved mean visits are a full week, with many hours in time zones adding to the communication complexities.
Yes, it’s true China and Asia are huge expanding markets but for an SME this represents a very difficult market to penetrate with many barriers to overcome.
I understand for many other technology-based SMEs having access to the EU Horizon framework has been the cornerstone of their development. What happens to this post-Brexit is still uncertain.
Access to skilled labour for all SMEs is a constant unsolved issue. In particular, apprentice-trained technicians are like gold dust for technology companies. Training your own is the only way since the reduction in supply of EU people coming to the UK only adds to this shortage. Retention of skilled labour is also difficult since the larger companies can offer better conditions than most SMEs and are a big magnet for UK trained technicians.
Our SME exports regularly to the USA, which until very recently has been a very open and friendly market for high technology companies. Current duties are very low, typically 2-3 per cent. It’s difficult to see a large change in US market potential with a new UK-USA FTA. It certainly won’t replace any market loss in the European market caused by Brexit.
As the UK moves towards Brexit on 29th March 2019 it would help immensely if Brexiteer MPs would inform themselves about the issues the UK industrial manufacturing base, including the SME companies, truly face. Improving the quality of debate and moving away from soundbites and negative hits for political purposes on UK business can only help improve confidence in the future.
The spectre of a no-deal Brexit still looms large over UK manufacturing and reversion to WTO rules. This would be disastrous for the UK industrial base from multinationals through to SMEs. The impact on jobs and government finances would be catastrophic, and the UK may never recover from this scenario; educating our MPs and Ministers about integrated supply chains, just-in-time supply & technology-based SME companies is a top priority. This option is more hopeful than the grim reality that Brexiteer MPs are so ideologically wedded to Brexit that they don’t care about the economic consequences as long as they get a Brexit.
Maybe some MPs can still be enlightened by a visit to your factory and a greater understanding of these critical issues? Let’s get the invitations out!
Paul Murray is Managing Director of Instrument Design Technology Ltd, a specialist engineering SME based in Widnes