Dean Group's Take on Brexit and the Importance of ‘Made in Britain’

Brexit continues to be a hot topic of discussion. As the cut-off date approaches, many are still left wondering what exactly will happen once the UK leaves the European Union.

While nothing is certain, I believe we shouldn’t underestimate the power of the ‘Made in Britain’ label, especially as March 2019 approaches. For many companies, this means shifting their goals to accomplish this new focus. After all, ‘Made in Britain’ is still strong and attractive to many clients, be it domestic or overseas, as we’re one of the largest economies in the world.

British-made products are known for being high quality, and many consumers will be eager to purchase products that will support the UK economy.

Current State of the Manufacturing Industry

The UK manufacturing industry makes up nearly a quarter of the entire economy of the country and accounts for almost 50% of UK trade. Over 7.4 million jobs depend on it, as well. At the moment, 81% of British manufacturers expect their orders from European Union countries to decrease due to the proximity of the March cut-off date.

There are pockets of companies that are fairly busy, but the majority are treading water, with growth falling behind Europe and the rest of the world. The problem is confidence in the market running up to and after March. No one knows whether we should invest or wait until after Brexit, when we should know more.

Britain’s automotive industry depends heavily on Europe for imported parts and exported vehicles, so this Brexit uncertainty is causing many changes in the sector. Just this past September, the number of new cars registered in the country went down by 20.5% and general turbulence doesn’t appear to be settling.

While it’s true that a deal is in the works at the moment, whispers of a hard Brexit can still be heard. Should this happen, BMW will shut down for at least a month after the UK leaves the EU, due to anticipated trade turmoil if we end up leaving with no deal.

Jaguar Land Rover say that Brexit could end up costing tens of thousands of jobs in the event of a bad deal, and that a hard Brexit could halt production at their UK car plants at a cost of ￡60 million a day. Honda believe there may be delays of up to nine days when it comes to importing parts into the country if the UK leaves the EU customs union.

Having laid off 1,000 agency workers this year due to the diesel downturn as well as Brexit, Jaguar believe that this is ‘the continuing effect of the chaotic mismanagement of Brexit negotiations by the government, which has created uncertainty across the UK’s automotive industry and the manufacturing sector generally.’

When it comes to aerospace and defence, another important UK sector which contributes ￡74 billion a year to the economy, it’s almost certain that British and European airlines won’t be able to automatically fly to each other’s territory if we leave the EU with no deal. The hard Brexit scenario has further implications; aviation licenses given out by the European Union will no longer be automatically valid after March 2019 and Britain could lose its membership of the European Aviation Safety Agency in 2020.

How will Brexit Impact Manufacturers?

Recent research from The Manufacturers’ Organisation (EEF) reveals that 25% of its members have either lost out or expect to lose out on investment, skilled workers and new contracts. 16% of industrial decision-makers surveyed say that business would become impossible for them if the UK reverts to World Trade Organisation tariffs in the event of a hard Brexit. 83% are not prepared for a no-deal Brexit, and 43% say that they are not prepared but also have no intention of starting any arrangements now.

Preparing for March 2019 is easier said than done. If we end up with little to no barriers when it comes to trading with Europe, and if there are no financial tariffs, then it’s likely that manufacturers will have a prosperous future.

At Dean Group, we don’t have our own products, so we rely on future sales from our customers. All we can do is to try and buy our materials slightly in advance to bridge the uncertainty of March to make sure we have sufficient materials to last us through April.

We share this uncertainty with other manufacturers. The EEF report shows that many are not sure about future opportunities, with 24% not clear what their biggest post-Brexit opportunity will be. However, while the majority of businesses agree that the world of manufacturing may be turbulent in the short term, they are optimistic that things should settle naturally as both the EU and the UK reach a stable agreement.

The Importance of ‘Made in Britain’ to the Future of the Industry

I believe that ‘Made in Britain’ products and services will start to gather momentum. We have lost some patriotism while we’ve been in Europe, but Brexit will help reignite our island spirit. While products made and sold in the UK will not be affected as much by Brexit, products brought in from Europe could carry 20% tariffs.

So, for example, farmers, fishermen and drink producers could see some immediate increased demand, as long as they have the capacity to fill the requirements and have the staff to do the work. The manufacturers that are left may be able to diversify and support the home market requirements. It’s important that we get the message out there that buying British is going to happen.

People should be aware that they may have to search out products that are British, because if there ends up being no Brexit deal, it could be a cheaper quality option that supports the country.

Christopher Dean is the Chairman at Dean Group, a UK-based investment casting company that is also a UK supplier which sources, manufactures and sells British products.