Defining the Challenge
- Seek to define the uncertainties their business may face
- identify probable scenarios and their economic impact
- identify a clear set of signposts for action and track them
- devise a specific set of strategic options given by the uncertainties
Traders may need to engage external logistics advisers to survey the wider market and offer traders insights in relation to alternatives at carrier/logistics provider level.
It may be that there is value in entering partnerships and arrangements with UK companies to take advantage of potential synergies. Traders may be able to offer them benefits in terms of EU market access and that they can offer traders benefits and efficiencies in terms of UK market access.
Management of UK exit from the EU
A senior manager should, where possible take responsibility for preparing a strategy for handling the effect of the UK exit from the EU. Scenarios should be developed for the possible outcomes of a no deal exit with tariffs and compliance costs and an EU UK trader agreement with compliance costs only. A plan should be developed to mitigate risks.
Regular contact should be maintained with supply chain partners to understand the thinking and pre-empt likely threats to their business. Contact should be maintained with development agencies and trade bodies to obtain information and advice as the UK exit from the EU process unfolds given the potential for by fundamental changes of directions. Grants and supports are available.
Traders should avail of States supports and grants as required. We have set out the aids available. The state has made available finance for making adjustments consequent on UK exit from the EU, including in particular state-guaranteed loans. See later chapters.
It is desirable to consider both UK exit scenarios carefully. The no-deal exit scenario is potentially more serious/catastrophic for many sectors. Traders can seek information from their customers and suppliers for a no-deal exit scenario which will also be used for an exit with a deal scenario.
As is common sense, Irish Revenue in a report indicated that the administrative and fiscal burden of UK exit from the EU cannot be underestimated. There will be obvious problems for businesses operating just in time operations. In most sectors, delivery on time is absolutely essential. UK exit from the EU has the capacity for bottlenecks and delays which could both cause legal problems for breaches of supply undertakings and commercial reputational damage that could be irretrievable.
In the case of some businesses, UK exit from the EU will require significant reconfiguration of their supply chains. Many businesses will not have the capacity to undertake the necessary changes, Some may face the loss of market share and others may simply be unable to operate in certain markets anymore.
If traders have UK based competitors, traders will need to consider the possibility of a loss of business that might arise by reason of adjustment in price. The essence of UK exit from the EU is to change the UK’s terms of trade so that in many cases, a decision will be made to purchase from a UK supplier rather than an EU/Irish. This will depend on the particular competitive landscape.
If all their competitors are based outside the UK, it may be possible to condition customers to expect price increases. It may be that some part of price increases can be passed on to customers.
Traders should analyse their competitors and consider how their cost base might be affected by UK exit from the EU. Traders might consider whether and to what extent they source inputs from outside the UK and whether this is a significant percentage of the selling price. They may be affected by weak sterling and customs costs. Traders should attempt to consider their competitors cost base relative to others and consider its impact in the event of UK exit from the EU. It may, of course, be that there are opportunities in Ireland respect of business formerly serviced by UK exporters.
Traders should give consideration to identifying and targeting new markets both in Ireland and continental Europe. Traders UK based competitors will be subject to the same difficulties in importing to Ireland and the EU 26. Their customers may be looking for methods to mitigate the role of exposure to UK exit from the EU by seeking competitors. By gathering market intelligence, traders may be able to identify their competitor’s customers who in this position and traders may be able to target them.
Traders may be able to suggest to the customers of such suppliers that they consider a second EU based supplier as a contingency measure in respect of part of the requirements. In the same way as applies to their own suppliers they may be willing to consider the trader as a supplier to manage their own UK exit from the EU issues. If customs duties and tariffs arise traders would then be in a key position to increase their share of their business.