The challenge of Brexit for UK companies
After the recent and monumental referendum result concluding that over the next two years the UK will ‘bow-out’ of the EU; to follow has been one of the most significant cabinet reshuffles recent history can remember. Given this huge change in our political landscape, “what does Brexit mean for UK manufacturers?”
Specifically for ATG Access; currently only 10% of exports go to EU countries. The Middle East, America and Australia have historically driven the highest demand for high-security products. The EU has however been identified as one of the biggest growth markets over the last twelve months and is forecasted to continue over the next two years.
In response to recent and tragic terror attacks in Brussels, Copenhagen, Paris & Nice; ATG Access has seen an increase in demand from EU countries which historically have not paid too much attention to physical security measures.
In terms of innovation specifically within the physical security industry; the EU is behind. Standards which regulate the industry have been born out of territorial collaborations between the UK, USA, Singapore and Australia – not the EU. The UK and the US lead the way in the physical security industry; this will not change and hopefully be to an advantage for future trading within the single market.
Being able to trade directly with both the USA and China could benefit UK manufacturers, however, this is very uncertain and the level to which the UK will be able to negotiate is unknown. Plummeting exchange rates do pose significant opportunities for UK exports.
Pre-Brexit, some EU projects were placed on hold and still remain on hold subject to funding approval from the EU. Looking at the wider picture, there is currently no indication that any of ATG’s existing distributors or EU clients have been affected by Brexit so far.
Price increases and general trading uncertainty will create volatility in the materials & currency market. A trading strategy with EU countries going forward is difficult to pre-empt as trade deals are surrounded by the uncertainty of Brexit negotiations.
EU’s investment in counter-terrorism security measures has risen from 2015 to 2016 by 64% (Euro investment). There is an uncertainty whether the EU will favour EU specific products and manufacturers or even invest in research and development just within the EU to develop security technologies. The worry is that security investment within EU countries and member states (USA & China) has been considered a “shared agenda”. Will the UK be excluded from supplier lists as a non-member? Will bias gear towards the USA whose perimeter security market is even older than the UK’s?
ATG currently exports 60% of all sales generated on an annual basis. A weak pound will make British manufacturers increasingly price competitive in overseas markets. Conversely, ATG also imports some components from overseas and have already been impacted by some supply price increases, in particular, steel which is trading in dollars. Uncertainties include the possible introduction of European tariffs introduced when shipping into Europe.
To conclude, despite the uncertainty of exact trading details between the UK and the single market ATG is confident in the demand for quality British manufacturing, innovation and engineering. Material price increases have so far been off-set by becoming increasingly more price competitive. The UK has been so involved in regulating the physical security industry and driving innovation, it is difficult to see demand altering ‘Post-Brexit.’