Update for traders

Brexit in the home stretch

The race to Brexit ends March 29. Will your company cross the finish line in front of the pack or at the back? Our top experts in the UK tell you exactly what you can do now to come out a winner.

Mike Towle 25.01.2019

London (AEB) – The United Kingdom is set to leave the UK on March 29 but as the deadline looms the political drama gets more intense. There is talk of an extension, a re-vote, a hard Brexit and no Brexit at all.

In the meantime, the swirl of uncertainty has led to a flurry of companies announcing plans that could hit the UK economy at a time when it is already reeling from the global trade war.

  • Airbus CEO Tom Enders cautioned that the aerospace giant, which employs more than 14,000 people at 25 sites, was not guaranteed to remain in the UK should it leave the EU without a deal.
  • Sony said this week it would move its European HQ from London to the Netherlands to avoid disruption caused by Brexit. Sony’s film, TV and gaming teams in the UK comprise dozens of staff while hundreds are employed by the company across its portfolio.
  • And appliance maker Dyson, whose founder James Dyson has been an ardent Brexit supporter, announced it was moving its HQ to Singapore.

The result has been a growing number of business analysts telling companies that the time is now to ensure they are prepared for any Brexit outcome.

''Failing to prepare is preparing to fail,’’ said Jessica Gladstone, a partner at law firm Clifford Chance, which partnered to do the study with management consulting company Oliver Wyman.

‘’Given the difficulty of knowing exactly what turbulence lies ahead many businesses are putting Brexit in the 'too hard' box’’ she said. 

‘’However, exporters that understand exactly what Brexit's risks and rewards could be for them will be able to implement the right plans at the right time to ensure that they are one of the winners rather than one of the losers.”

Angela Merkel -  Photo: Bundesregierung/Kugler
Angela Merkel - Photo: Bundesregierung/Kugler

 Geoff Taylor, AEB's general manager in the UK, said most companies there have no idea that Brexit will force them to complete import and export declarations for the first time in more than 40 years and that the cost of those added declarations will have a major impact on profit margins unless they move to an automated solution.

‘’The biggest thing that strikes me is that the vast majority of businesses are doing nothing because they are waiting for the final details of Brexit to be communicated,’’ said Taylor.  ‘’Post Brexit, the burden for export and import declarations will be huge. That’s going to cause shock and havoc throughout the business community because everyone has their head in the sand.

You can find help and insight for Brexit in our Brexit toolkit. It's loaded with all you need to know to navigate your way through any outcome.

‘’Our message is, why wait?'' said Taylor. ''This is confirmed. It’s going to happen. Why would you wait for all of the Brexit details to be disclosed? Instead, shouldn’t you be considering software like our customs management applications that can streamline this part of your operations?’

‘’Going to a freight forwarder and asking them to do your customs declarations for you is not the answer.  The volume is going to be so significant that the increased cost of money to business will impact  margins. Implement software that’s going to automate processes.’’

AEB Customs Management is our central platform for managing customs processes. Its end-to-end IT integration and smart automation allows companies to accelerate customs processes and save valuable resources. The AEB software also helps companies take advantage of free trade agreements, making products more competitive. And all that on the foundation of a smart solution for classifying master product data. Companies gain by having complete transparency of customs processes in a single secure and automated solution.

Claire Umney
Claire Umney

Claire Umney, strategic initiatives director at AEB, said the investments companies are making now in operations should be aligned with what’s needed to prepare for Brexit.

‘’An internationally growing company should invest in new market research and look for opportunities in automating their supply chains, in particular the cross-border transactions,’’ Umney, who works for AEB in the UK, said. 

‘’Companies should understand the structure of their supply chains and ensure risk is removed by having flexibility in sourcing and selling into different markets. The good news about this kind of investment is that it will not be wasted, regardless of what happens with Brexit, but without it, a company’s growth strategy will fail as will their ability to cope with the challenges Brexit might bring.’’

Frans Kok, general manager of AEB Asia Pacific, agrees.

''As most companies plan for the next 5 to 10 years when they make plans for strategic investments it is key to understand the implications Brexit will have on their business models,’’ he said. ‘’Look at the latest tariff disputes between the USA and EU and how it impacts the supply chain immediately.’’

The Wyman and Chance study found that hardest hit regions will be Bavaria in Germany and London in the UK though there is no escaping in other areas. The industries expected to be the hardest hit are the automotive sector and financial services.

Taylor said it’s time for business everywhere to let go of the notion that Brexit may not happen.

‘’The ship has sailed,’’ he said. ‘’We have signed Article 50, which is our exit. This is happening. It would take a massive people shift to stop it and the average man on the street does not care. He’s more worried about how you will get to his holiday destination or where the pound will be against the Euro.’’

About the author
Mike Towle
Mike Towle has been involved in content creation for more than three decades. A former reporter, he’s worked in all forms of international media – digital, print and video. He’s driven to find the best way to tell every story and then publish it in a mode that finds its perfect audience.

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