Can the manufacturing sector really afford a no deal Brexit?

With the EU exit deadline fast approaching, Chris Barlow Head of Manufacturing at MHA discusses the impact of a no deal on the Manufacturing sector, and what businesses can do to prepare.

The sector has faced challenges before, but today’s scenario of a potential no deal with the EU and the COVID-19 pandemic is truly unprecedented. For the sector to survive it’s imperative it remains competitive and is able to grow, thereby protecting jobs, and so the sector is looking towards  the Government to play their part and deliver a deal with the EU.

If you are a manufacturing business operating in today’s world, an integrated supply chain is essential to the smooth running of your business. Unfortunately, even by adopting ‘Just in Time’ processes, should one part be delayed, it can undermine the whole chain and cause major disruption. In the event of a no deal this will only exacerbate an already fraught situation. This is where the introduction of a ‘protected zone’ or ‘soft landing’ for businesses is a must, but at the moment there is no firm idea of what these might look like or if it’s even a possibility.

One option for businesses is to reshore, but this is not viable for many. The skills shortage also plays a huge part here. The gap is only getting wider and this coupled with the realities of a global pandemic threatening to strengthen trade barriers between nations, would have devastating consequences.

The Government has realised that intervention and the provision of various targeted types of state aid have been necessary, such as the introduction of the Job Retention Scheme and CBILS, CLBILS and BBL, but these will not last forever, and nor are they a viable or realistic substitution for a deal. But, in a few short days we shall have a certain outcome on the EU question, so what can businesses do to ensure they are as ready as they can be for whatever the scenario?

The CBI and other groups are constantly lobbying the Government and pushing for the introduction of safe havens to lessen the impact of a potential no deal, so manufacturers should contribute to these discussions, and make sure their voices are heard.

Businesses could look to shorten their supply chains by reshoring and ensuring a smooth process, as well as reviewing supply routes etc.

In terms of the confluence of Brexit and COVID-19, each business should be reviewing budgets for the upcoming changes, with regard to the ending of the current Job Retention Scheme and the introduction of the new one, as well as a potential review of what the Government term ‘viable jobs’. They should also check on their situation with regards to CBILS, CLBILS and BBL schemes, since the deadlines have been extended and businesses who did not require help in the first wave, may now do so.  

Ensure your contingency planning for a no deal is reviewed and strengthened where necessary – minimum stockholding checks, alternative delivery sites etc.

For many, this is a worrying and confusing time. So, talk to your advisers about helping you through. If you’re not sure where to access funding for instance, they can help with that, and a variety of other issues that may lighten the load. It’s an old phrase, but never at truer one in these times – we are all in this together!

Find out more

For more information on MHA and how we can help you/your business, please contact Chris Barlow at chris.barlow@mhllp.co.uk or 0121 236 0465