At the time of writing (mid-Oct 2019) it is anyone’s guess whether the UK will leave the EU with the recently announced Brexit deal on 31st October, our EU membership will be extended, Brexit will be cancelled altogether, or we’ll be plunged into a no-deal Brexit.
Brexit could affect the UK steel industry in many ways. If managed correctly there could be growth opportunities, but leaving the EU is also fraught with risk, especially in a disorderly no-deal scenario.
Advantages Of EU Membership
The UK steel industry has benefited greatly from EU membership over the past few years. Membership has given the UK a competitive edge over large US and Chinese steel manufacturers in the European single market, allowing it to command better prices globally. This stability has opened up greater employment opportunities and scope for investment in growth.
British steel manufacturers have benefited from seamless supply chains between EU countries, and the ability to attract European talent to address the UK skills shortage.
These benefits will disappear overnight in the event of a no-deal Brexit. Although we are optimistic about the long-term future, we should also be candid about the damage a disorderly Brexit is likely to cause.
The Dangers Of A No-Deal Brexit For British Steel
Short-term, a no-deal Brexit will cause moderate to severe disruption to supply chains for several months, at least. British businesses may need to look outside the EU for alternative supply chain partners, which will take time to develop the necessary business relationships with. Meanwhile, UK steel exports risk being outcompeted in the EU by their German and French competitors. European businesses will also be severely affected by a no-deal Brexit, but this is cold comfort for UK businesses who are already struggling with rising prices and restricted supplies.
In the worst mid-term scenarios, a no-deal Brexit could lead to the percentage of UK steel exports facing trade restrictions, including import tariffs, rising from 15% to 97%. A no-deal Brexit may also result in higher shipping and admin costs, running into the millions of pounds. After Brexit, UK steel would be less attractive to EU manufacturers because it would be classed differently to steel produced within the EU.
Long-term, these trade barriers may disappear due to new trade deals, and we can’t discount the potential global opportunities of being outside the EU. However, many businesses won’t be able to handle the short to mid-term rise in prices – and we expect several tough years for the UK steel industry if a deal is not agreed.
How To Prepare For No-Deal
So, what advice can we give to businesses concerned about the UK steel industry following a no-deal Brexit? At the moment, the best thing to do is hold tight. We don’t know what is going to happen, so can only hope for the best while preparing for the worst.
Our experience of the UK steel industry gives us confidence in its long-term resilience. Many businesses have been busy making no-deal preparations for a couple of years now, so are better prepared than they were in 2017/18.
Broder Metals – Ready For Brexit
As for ourselves, we would like to assure our customers that we have taken every possible step to secure our supply chains in the event of every Brexit scenario. We work with a diverse network of supply partners around the world, and hold ample stock of all our products – so service will continue.
In the meantime, business continues as usual. If you’re concerned about Brexit or would like to discuss your requirements, please call us today on +44 (0) 114 232 9240.