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Brexit: building a firm platform for growth

14-10-2020

Establishing a European supply chain will be key to growth post-Brexit, according to Keith Aldrich, Contracts & Procurement Director

Brexit: building a firm platform for growth

Many British exporters that currently do not have supply chain operations in Europe are seeking to establish them, while those that already have them – like MiTek Mezzanine Systems – are bolstering their networks and partnerships in preparation for Brexit. Although Britain's exit from the European Union is accelerating the move to build Continental supply chains, Brexit is not the only reason for this trend.

 

Brexit challenges

The referendum vote to leave the EU in 2016 and the triggering of article 50 in 2017 feel like distant memories. There seemed plenty of time for negotiation of a trade deal but, with the transition period due to end on 31 December, a no-deal Brexit is looking increasingly likely. This would mean the imposition of the World Trade Organisation tariff structure and the requirement for border checks, with the distinct possibility of delays. With around 10,000 lorries crossing the channel daily, millions of extra customs declarations have the potential to cause gridlock around UK ports. Without a European supply chain to rely on, British companies exporting goods required for time-sensitive contracts – including warehouse construction or automation projects – would undoubtedly feel the pressure of these delays on existing and future business. It was the need to mitigate supply chain and exchange rate risk that led us to establish MiTek Mezzanine Systems GmbH in Cologne, at the heart of Europe, back in 2017. This office has not only been handling our work in Germany but projects right across Europe, from the Iberian Peninsula to Scandinavia.

 

Speed to market

However, Brexit is not the only factor behind the strengthening of our European supply chain. We have strategic expansion plans for MiTek Mezzanine Systems in Europe, as a result of demand from clients, particularly in the e-commerce sector. If we want to be the supplier of choice for these renowned brands, we need a robust supply chain network in order to be able to meet their demand for rapid speed to market to deliver fast ROI.

 

E-com growth

Of course, this growing demand from companies in the e-com sector has been boosted by the surge in online shopping brought about by the Covid-19 pandemic. The nature of e-com orders – and the consequent returns business – demands more space for fulfilment, hence the demand for mezzanine floor solutions. Against a backdrop of labour shortages due to Brexit's impact on the availability of migrant workers, the rise in e-com volumes is also feeding demand for warehouse automation – although this may now be dampened somewhat by rising unemployment in an economic downturn. The increasing use of heavy automated equipment in warehouses is fuelling demand for strong mezzanine floors, such as our own Mezzanine7, which is up to 7 times stronger than a standard mezzanine. The pandemic has also sharpened many firms' focus on business resilience, partly achieved by restructuring of their supply chains to reshore – or at least near-shore – their operations, again boosting demand for new warehousing facilities in the UK and Europe.