January/February 2021

BOARDROOM REPORT 26 HYDRAULICS & PNEUMATICS January/February 2021 www.hpmag.co.uk to protect the needs of our customers just in case there were any supply issues further down the line, whether due to a bad Brexit outcome, the effects of the pandemic, or both.” Martin Cuthbert comments that Webtec recognised the threat that Brexit would have on its business as soon as the Referendum happened in 2016. “Speaking to many of our customers in central Europe, their perception has been one of dismay and it has clearly made the UK a less attractive place to consider purchasing from as we’ve progressed through the transition period,” he says. “The European perception seems to be that buying products from the UK is going to get much more complicated and much slower and therefore potentially more expensive, due to the increased burden of buying from the UK and shipping it into mainland Europe. Whether this turns out to be true or not is probably no longer relevant despite the last-minute trade deal as the damage is already done and people’s perceptions have been reinforced reading the past four years’ news headlines – and it will take quite a long time to change them. Over the past two years Webtec has set up a new company in Germany called Webtec Europe, specifically to serve our central European customers. We have recently opened our European warehouse and we are also finalising our service capability so that our European customers no longer have to deal with a British company but can be served entirely by a German one. This approach has been welcomed by our customers as it provides certainty in a very uncertain world. Webtec Europe has also been recently accredited to ISO9001: 2015.” Ringlstetter comments that he is happy to see that a deal has been agreed upon between the European Union and the UK, and that so far we have not experienced severe effects on the transport of our equipment into the UK. Regarding the effects on ELGi Europe’s business, Ringlstetter explains that the company is currently gaining traction in the UK & Ireland, and he anticipates this will continue throughout 2021 and beyond. “We continue to invest in this important market even during the pandemic because arisen revolves around the disproportionate complexity of these rules.” Buxton explains that the BFPA seeks to help members through this jungle of regulation but considers that the more one delves into the subject the more complex it becomes. “Fluid power companies, like most product-driven industries, will have to examine their supply chains to check that they meet percentage thresholds for content,” he says. “This is a non-trivial exercise, and many are having to employ expensive consultants to help them through the process. On the potential upside, we may see an increase in domestic sourcing of product as the cost of importing increases – as it surely will.” Chessari believes that, with Brexit, we are facing increased red tape for certain products as well as increased transport costs for imports and exports. “Even with the EU zero custom duty trade deal we will still see an increase in administration costs and logistic issues,” he says. “Brexit is also creating a lot of uncertainty and this is the most difficult year to forecast. In the next 6 months I think that logistics delays will be resolved as the carrier companies become more organised with group shipments, more familiar with the new required documentation and UK exporters start using new software (like CHIPS) to deal with customs directly without paying this charge to the transporter. Brexit will have increased costs for UK businesses and the only options for the next 2 to 3 years will be to either absorb the cost or to transfer it to the EU customers. In the long-term Brexit could be successful only if the UK manages to negotiate good deal with non- EU countries.” In terms of the Brexit outcome uncertainty during 2020, Gunter explains that Abdex increased its stock inventory by around 40% to ensure its customers would not experience any slowdown in supply within the UK. Some suppliers in Europe and the US were naturally concerned by the pandemic and their ability to work as normal. In the event, they operated very efficiently under the circumstances. Nevertheless, we felt the best thing for us to do was to boost stock it’s clearly evident that there is a need for a company like ELGi in the compressed air industry.” He adds. Adrian Farnham, managing director, Camozzi Automation Ltd, explains that amid the uncertainty around future trade agreements during 2020, Camozzi Automation, like so many businesses, was eager to start forging and implementing Brexit plans. “We substantially increased stock levels; not only of standard components, but also of kits to enable Camozzi Automation to manufacture and assemble locally in the UK,” he points out. “This also means we have to be well- versed in new articles of conformality. As we know, UKCA marking will apply to most goods currently subject to the CE legislation. The main implication during last year, which has been well- documented, was the economic unpredictability, as a result of a possible ‘No Deal’ Brexit, inevitably leading to reduced consumption and loss of revenue for manufacturers. It was a great relief to Camozzi Automation Ltd, as I am sure it was for some many UK businesses with highly integrated EU supply chains, that a UK-EU deal was stuck.” Farnham continues: “We are all in no doubt, the ‘break’ from the EU will not be ‘plain sailing’, with potential trade complications surrounding supply chains and increased operating costs etc still remaining a challenge. UK manufacturing has been so tightly linked with the EU for so long in a number of ways. Nearly a half of UK exports and imports of manufactured goods go to, and come from, the EU. Sectors such as automotive are highly integrated into EU-wide supply chains. The fluid power market is no different, and we will have to find ways in which to pass on these additional costs. “We are positive, though, that Brexit does open the door to new opportunities, innovation and productivity for organisations like Camozzi Automation, who are focused on delivering new technologies within the manufacturing sector, as well as increasing investment in stockholding, local manufacturing and personnel, and it’s up to us to seize on this optimism and opportunity and ensure UK manufacturing is at the forefront.” Chris Ringlstetter, president, ELGi Europe Andy Parker- Bates, product marketing manager, Festo UK Alexander Pavlov, general manager, Atlas Copco Compressors UK