Brexit: Hitting home
While some maritime businesses may have initially been confused about what Brexit would mean to them, others felt it immediately.
Take REAP, a sophisticated, Southampton-based marine energy developer with customers in the UK, Europe and Scandinavia. This company had had a quotation out for a system involving around £23,000 worth of cells “but by the time it was confirmed, the news about Brexit had hit, which left the pound much weaker... this made the cells around 20% more expensive and we had to absorb the loss” said owner Dennis Doerffel.
This may be dismissed as simply unfortunate, but he pointed out that there’s a longer term impact for committed, ethical businesses. “We are in the ‘sustainable’ sector,” he explained, and that makes a difference not just to the ‘product’, but the pattern of business itself. “Most of the systems we develop are bespoke, they are big, long-term energy investments for our clients and they need to know that we will still be able to support them in five years time. Because of the uncertainty our clients – even ones outside the EU - may well start to favour European businesses over ours.”
The issue is given a whole new dimension for Dr Doerffel and his partner who are aware that despite 14 years of tax-paying hard work, “at some point we might get a letter saying we have to pack up and leave”. In his view the government’s decision to use the status of 3.5m Europeans living in the UK “as bargaining chips” in negotiations against UK citizens in Europe is “effectively taking our future hostage”.
This has a knock on effect: “We can’t honestly make plans to invest in our company – we simply don’t know what is going to happen.” He added in his opinion the lack of clear aims and objectives before the referendum and triggering Article 50 has meant “uncertainty will keep stalling investments and business in general for the next few years".
While some have held out the hope that a weakened Pound may encourage European buyers, Bruno Tideman, founder and CEO of Dutch company Tideman Boats told MJ: “Trade depends on more than just the relative weakness of one currency to another. If you do business within the EU there’s no import duties, no VAT, just shipping costs: that makes you very agile and competitive.”
There is, he said, value in an established supply chain for specialist builders both in the UK and Europe and this is what Brexit threatens to dismantle. Tideman sources all its major components internationally, including the UK: “It has taken us years and years to get to a position where different suppliers know exactly what we want,” he explained. “If we have to start dealing with import and export duties, as well as the hassle of getting components cleared through customs, it is going to take a lot of time and energy away from our core business.”
He believes the overall effect will be to divide: local UK boat builders will focus on domestic suppliers “and it will be harder for us in Europe to enter the UK market” he said.
Mr Tideman isn’t the only one to worry about customs administration: Tim Waggott, CEO of the Port of Dover told the All-Party Parliamentary Maritime and Ports Group that the reinstatement of customs clearance at the port could be crippling for Dover and UK plc. He explained that at present, “an HGV transits the Port of Dover in about a minute”, and there really isn’t much room to extend this window. “If you take the volume of traffic that transits Dover just in one day, put nose to tail it would reach from Dover, up through the M20, around the M25, over the Dartford crossing and go up the M11 as far as Stanstead Airport.”
He pointed out if Eurotunnel traffic is added “then between us we have 30% of the UK’s trade passing across the Dover Straits”. Unfortunately, viable alternative routes “simply don’t exist” and if rapid transit through the crossings and into the wider freight corridor is not maintained “the impact is astronomical” said Mr Waggot. Therefore, customs delays could gridlock a large proportion of the UK supply chain with repercussions felt in France, Holland and Belgium.
Yes, there is a solution: Mr Waggot says an IT-driven virtual border would help maintain frictionless trade, possibly taken in conjunction with an internationally-recognised ‘passport for goods’.
However, it would take high-level direction, money - and time. As most people are aware, it looks like we only have two years.
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