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Brexit Roundup: Prepping for a ‘No-Deal’ Supply Chain and Manufacturing Disruption

January 25, 2019 Leave a comment DRI Admin

With a Brexit agreement still seemingly unattainable, businesses are preparing for a future of uncertainty for manufacturing, supply chains, and the ultimate impact on consumers.

Due to the lack of an agreed-upon plan for Britain’s withdrawal from the European Union A “no-deal” Brexit agreement is looming for the end of March, many businesses have found themselves developing their own plans to avoid production disruptions. According to the New York Times, Honda, which produces about 150,000 cars a year in southwest England, will stop production in April to assess disruptions from border delays, while BMW said it will shut its Oxford Mini factory for maintenance.

The biggest concern is the disruption to just-in-time manufacturing that relies on goods crossing the British border from France, arriving at factories within minutes of final assembly.

Retailers, meanwhile, have been advised by Metropolitan Police to hire extra security in case shortages create a rush of shoppers.

To assuage fears, the British government conducted a public exercise to test how it would manage potential disruptions at the border, offering truck companies about $700 per truck to gather at Marston Airport to test how traffic backups from customs checks off ferries could be managed. It wasn’t a great showing: only 89 trucks out of the expected 150 showed up.

Supply Chains and Stockpiling

The contingency plans of some companies include stockpiling goods and duplicating manufacturing processes – particularly the pharmaceutical industry. The Association of the British Pharmaceutical Industry (ABPI), said:

“The focus of pharmaceutical companies is on making sure that medicines and vaccines get to patients whatever the Brexit outcome. This includes stockpiling and duplicating manufacturing processes here and in Europe. We continue to work as closely as possible with Government on no deal planning. But we reiterate that ‘no deal’ would prove to be extremely challenging. With time running out we hope Parliament will come together and quickly find a solution to the stalemate and reassure patients that medicines will not be disrupted come March 2019.”

Some individual consumers have begun sharing that mentality. A recent Guardian profile spotlighted “the Brexit stockpilers,” who have coordinated a Facebook prepper group, coordinating 100-200 requests to join each day. In this case, the “prepper” mentality is closer to sensible planning for being snowed in – collecting canned and dry goods, medications, and dog food, in case of shortages after March. Said one such prepper, “I don’t really trust the government to look after me; I certainly don’t trust them to look after my dog.”

Government Response

In late December – possibly foreseeing a lack of agreement come January – the UK government published information to assist businesses with planning for a no-deal Brexit:

The HMRC Brexit “Partnership Pack,” to help companies prepare for changes at the UK border, including customes, excise, VAT and regulatory changes and importing/exporting steps, and

The UK government’s preparations for a ‘no deal’ scenario document, explaining the circumstances in which a no deal scenario might materialize, and the government’s overarching approach to preparing the UK for this outcome while minimizing disruption.

 

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