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Brexit: a ‘total disaster’ of our own making

Brexit has caused a crisis for British manufacturers who export into Europe – and things could be about to get even worse...

Image: The New European/Getty

“A total disaster”. For Adrian Hanrahan, Brexit has been nothing but that. And if you ask him why, he just says, “How long have you got?”

Hanrahan is from Ireland and is the managing director at Robinson Brothers, a specialist chemical manufacturer in the English Midlands. It develops and makes niche products used in the pharmaceutical, food and electronics industries and employs 180 people. 

It is just the kind of high-tech, specialist, exporting manufacturer that there aren’t enough of in the UK. It does 70% of its business inside the EU, and Brexit has thrown obstacle after obstacle in its path.

For a start, there is the added red tape – at a significant cost – that comes with doing post-Brexit business in Europe. Then there is the pain of UKReach, the copycat version of the EU regulatory framework for chemicals. It means that Robinson Brothers may have to test and register all its chemicals in the UK, as well as in the EU.

This would not just be a matter of copying and pasting the information, as much of the data is not owned by Robinson Brothers but by other businesses or by the EU. It would mean pointless, massively expensive duplication for Hanrahan and his firm. “We will have to re-register all our products in the UK at huge cost… there is one product alone that could cost us £1m,” he told me.

That, of course, makes EU-based companies think twice about using a UK firm. Why risk the chemicals not meeting EU standards, why accept the added costs, why bother?

Hanrahan sees it first-hand. “In the past we got new projects in from all over Europe. Currently we are working on one with a company in Belgium. Now they are saying: ‘Hold on a minute. Do I give them this project, or do I just forget the UK as a market and as a supplier, and just make it in the EU?’”

And that, as Hanrahan makes clear, is only the tip of the iceberg, because this is a project he knows is under threat. What he doesn’t hear about are all the continental companies that don’t even bother dealing with his firm because they aren’t in the EU. 

He knows of very large German chemical firms who just won’t touch the UK with a barge pole, who literally tell their agents that they want “no more projects in the UK. It is too uncertain, so we are going to give these projects to European firms.”

You might be wondering why Hanrahan is not complaining to the government, explaining the issues, warning of the consequences and asking for it to do something to oil the wheels of business, improve the Trade and Cooperation Agreement with the EU, do something, do anything.

Well, of course, he and everyone else with skin in the game have been doing just that, too. But, he says, “I have said this to the government so many times, to various government ministers, but it is like talking to my bloody labrador, they have no idea at all… I do get quite irate about it.”

As he points out, this is not a one-off hit. Brexit is a continuing expense, a persistent problem and a continual drain on companies like his. “If we do not keep our pipeline full, I am going to have to look at reducing our workforce,” he admits.

But getting new business is not as simple as it used to be. Those added costs and problems caused by chemical industry rules and regulations are just one of the issues. Leaving the EU also made things slower and more difficult for every firm that exports to mainland Europe. Hanrahan can even put a figure on it. “Robinson Brothers now has a 17% premium, just because of the added administration of Brexit on our existing products.” Something it seems the government is totally indifferent about. You might expect a Conservative government to care that it is pricing British business out of competitiveness, but apparently not. “They are living in absolute cloud cuckoo land; they don’t have a clue what is going on,” he says.

Hanrahan speaks to many other manufacturers who are having similar problems. The government tells them to find new markets, but their business, just like Robinson Brothers, is mainly done in Europe and has been for decades.

“The vast majority of new development work for projects that we get comes from the EU,” he says. Robinson Brothers “have probably lost 8% or 9% of our business that we know about” because of Brexit. On top of that, of course, are the contracts and new business that he never gets to hear about any more.

It is a story that is being repeated across manufacturing. The latest research by Make UK, which represents the manufacturing industry, shows that there has been a slight improvement in its members’ attitude to Brexit. It used to be that 96% of them were reporting “challenges” when trading with EU partners, but the figure now is still 90%. It does not look like Brexit was a temporary blip.

Customs paperwork, border delays, logistics, skill shortages, proving details of the origin of goods and thus avoiding tariffs on exports to the EU; the list goes on and on. What manufacturing business really wants to see is a better deal with the EU and more cooperation; in fact, they have a model in mind. They want the same deal for the rest of the UK as Northern Ireland has.

Rishi Sunak let the cat out of the bag when he said that “Northern Ireland has the best of both worlds”, inside the UK and the EU’s single market. But British industry’s chances of getting a similar deal are exactly zero, because the government doesn’t care and won’t listen.

Richard Rumbelow, director of international trade at Make UK, says things may well be getting worse. Many EU companies had five-year or longer supply deals with UK firms, but those that were signed before Brexit are now coming to an end and “firms are just beginning to notice a greater hesitancy in European customers; in terms of contract renewal, contract value and contract quantity, than they may have seen before.” If nothing else, a contract renewal gives customers the chance to look again at the cost and risk of doing business with UK firms, and perhaps decide to just go elsewhere.

The same is happening with investment in the UK. We were an attractive place to base yourself if you wanted to do business across the EU – the language, the legal system, the free-market economics all helped.

But now? Well, as Rumbelow explained to me, “the UK was an attractive staging post for access into the EU, but loss of that access will have played a part in companies’ decisions not to necessarily invest as much in the UK.”

That is investment the UK has always desperately needed, it was foreign investment and foreign firms that helped to keep the UK’s appalling productivity figures looking a lot better than they should have done. Without them, the UK will fall further behind its economic rivals. 

It will also fall further behind Europe and the USA, because both have industrial strategies to develop new green technologies, battery factories and microchip manufacturing. As Rumbelow puts it: “The US and EU have thrown huge amounts of subsidies and state support into the system. The UK can’t compete and has been hesitant in how it reacts to that… which means international investors might say ‘the UK may be great but look what we can get in other countries’.”

That is the principal reason why many manufacturers and their lobby groups have been begging the UK government to develop an industrial strategy. The UK cannot compete financially with the EU and the USA, not to mention China, but a joined-up strategy, some commonsense policies and some attempt to reduce the barriers to trade that Brexit has forced on British industry would at least be a step in the right direction, but this is yet another plea that has fallen on deaf ears.

The British government is not, it seems, interested in learning the facts from British business, nor in helping them. It does not listen, and it does not care, in fact it lectures them time and again on “Brexit opportunities” that do not exist except in ministers’ minds, and tells them they just have to adapt to the new realities of a harder, harsher life.

I will leave the last words to Adrian Hanrahan. When I put it to him that ministers such as Andrea Leadsom and many others now argue that all this pain is worth it because it is just the price of sovereignty, his response probably speaks for us all.

He simply exclaimed, “ah, Jesus”.

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