Catering Insight – Dealing with the shock of Brexit
The end of the Brexit transition period on December 31, 2020 means that all UK businesses are now facing a major shift in their dealings with EU countries. But in the catering equipment industry there are many top UK based manufacturers. Has this change offered them additional opportunities?
At Weston-super-Mare-based Clifton Food Range, MD Melvin Dickson believes it is too early to tell, but he believes, “As trade deals are established with overseas markets, we anticipate an expansion of our sales in these new areas. However, sales of our British made products continue to grow in export markets, thanks to the reliability and high quality that British made products offer. “
In terms of costs, the vacuum equipment specialist has been fortunate that the EU-based component suppliers he works with have maintained the price levels. Dickson detailed: “Where there may have been potential for uplift, we have now made arrangements to collect from manufacturers, thus avoiding additional administrative costs. These in turn are compensated when we export, as most of our distributors now collect from us and we no longer have the cost of organizing shipping to them.
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“We have decided to freeze our prices for 2021; it’s our way of supporting our dealer network as best we can throughout the year. “
At Falcon Foodservice Equipment, headquartered in Stirling, MD Peter McAllister analyzed: “What we’re seeing right now is a significant tightening of global supply chains, it’s a mix of reduced capacity due to Covid, increasing volumes, freight delays around the world and the overall impact of Covid on the global economy.
“In general, delivery times extend globally and demand patterns are volatile, resulting in short delivery times. It’s the perfect storm for importers but real opportunities for companies that can manufacture as close as possible to their customers. As a UK manufacturer we can be flexible and nimble in adjusting manufacturing plans to meet the demands of our customers. “
He added, “Like most businesses, we’ve seen costs go up; it’s a mix of freight, rising commodity prices, and suppliers looking to take advantage of the current situation. As a UK manufacturer, we are able to respond quickly to customer demand and supply chain price pressure. “
Elsewhere, the Welbilt Merrychef brand, whose accelerated ovens are made in Sheffield, noted that Brexit transitional changes being implemented in ports, along with IT systems, logistics and tasks, have been traversed, managed and resolved. by its experienced teams. According to Colin Lacey, vice president and general manager: “We have prepared for Brexit three times, at a significant cost to the company, and yet we still had ‘surprises’, but only our very dedicated Welbilt team. has not been able to manage and resolve. “
Noting that the take-out and delivery boom provided Merrychef’s second best quarter in its 70-year history, Lacey nonetheless admitted, “We have incurred additional costs such as double duty on imports. and exports with the EU. In addition to the direct monetary costs, there have also been indirect costs, especially within our logistics administration to ensure that our team is fully aware of all the new paperwork and new legislation that we have to comply with. “
Counter and display specialist Victor Manufacturing recently moved its factory to Keighley, West Yorkshire, doubling the footprint of its previous base in Bradford. At the same time, MD Phil Williams was preparing the company’s exit strategy, as Steven McGarvie, UK Sales and Marketing Director, detailed: “He had the great foresight to use our strong supplier relationships. to negotiate better conditions and obtain an additional stock of raw materials held and bought back. rooms. This means that we have been able to alleviate the problem of the rising cost of materials without interrupting the supply.
“We have tried to reduce some of the pain our customers have experienced, by passing on this saving by maintaining our prices throughout 2021.”
McGarvie added: “After speaking to our dealer network, we have found that they and end users find it difficult and expensive to source products outside the UK after Brexit . This means we’ve seen an influx of inquiries for standard and custom units since the start of the year. “
However, other manufacturers have been rather damning about the impact of Brexit. For example, Roz Scourfield, National Sales Director at Hoshizaki UK said: “The new Brexit conditions have yet to present new opportunities. Instead, we face more administrative hurdles and business hurdles. In addition, from April tighter import controls come into effect and the industry may therefore face delays in receiving orders in the UK. I would advise customers to place orders quickly to avoid disappointment. “
She added: “Since the end of the Brexit transition period, our export activities to the Republic of Ireland have faced significant additional costs, not to mention the additional time and costs incurred for administration. required. ”
Likewise, Precision Refrigeration MD Nick Williams said: “So far, either at the micro or macro level, I haven’t seen anything positive coming from Brexit yet. It has to be one of the greatest self-inflicted wounds an economy has ever inflicted on itself. Overall export / import costs are skyrocketing and bureaucracy has multiplied. Now not only do we have to comply with European regulations (to which we no longer have any input), but we also have a new set of new UK rules to follow. “
Further, he pointed out, “While the cost of goods has remained constant, the cost of shipping and ancillary import / export charges have exploded. In January, and even now, it seems the truck companies are simply avoiding the UK because it’s too complicated for them.
“To give a concrete example, we have a component supplier in Germany. Before Brexit it was costing us € 120 to ship our monthly order to Thetford. In January, that cost rose to £ 800! This corresponds to an overall double-digit increase in the landed cost of these components.
“So far we have absorbed these additional costs, but it can only last so long before we have to pass them on to our customers. In the meantime, we are consolidating shipments and having larger quantities delivered less often to try to mitigate the increased costs. All this in the hope that the situation will calm down in the near future.
At thermometer maker Electronic Temperature Instruments, director Jason Webb said: “The UK has always been an exporting power. But we cannot have any illusions. Brexit, associated with the pandemic, presented a multitude of obstacles and problems. It takes a lot longer to get things done, which means we had to put in extra resources to fix shipping issues that previously weren’t a problem.
“For example, we recently had products that went to Italy and remained in transit for 3 weeks before returning to France and then returning to Stansted. We hadn’t recalled these products, and at the other end of the spectrum, a customer was still waiting for them to arrive. Instead, there was a communication problem at the other end regarding the paperwork. These were returned to us for additional product certificates which take time to produce, and time is money. “
Milton Keynes-based Mechline Developments has also experienced transportation issues, Marketing Director Kristian Roberts detailing: “From a logistical point of view we have seen an increase in costs due to the additional processes in place at the borders, for example. example customs clearance fees and documentation requirements. These were managed through negotiations with our supplier partners abroad as well as with logistics operators.
“In anticipation of Brexit, we have taken responsible steps to preserve the quality of our products and services and have been in contact with all suppliers regarding their plans to mitigate the potential impact of the Brexit deal.”
However, he was optimistic, saying: “Brexit and Covid-19 have forced customers and clients to seek more local and reliable sources of supply, with much reduced supply chain complexity. As a UK manufacturer this presented an opportunity for Mechline. We are proud to manufacture in Great Britain and source large quantities of raw materials from the UK. Not waiting for supply chains outside the UK allows for quick deliveries, large or small, at a reasonable delivery cost. “
Elsewhere, Lincat has been very positive about the opportunities offered by Brexit. Group Marketing Director Helen Applewhite was enthusiastic: “We hear about overseas catering equipment manufacturers raising their prices to cover import surcharges; this, combined with freight and supply issues, means manufacturing and sourcing in the UK has never been more important. The results of a recent survey of our distribution partners and end users echo this. 69% of respondents said buying from Brits was important to them. We can only see this number increase as the Brexit conditions impact.
“British manufacturing is at the heart of our philosophy, which is why each of our products is built and assembled on site at our dedicated facility in Lincoln.”
Acknowledging that Brexit had an impact on Lincat’s export business, both financially and with freight delays, Applewhite added: “Although we had to pass customs fees on to our distribution partners in the UK. Abroad, we are working with them to consolidate their orders in order to mitigate these costs.
“The introduction of customs paperwork increased the administration of all export orders by up to 20%, but as a company we made the decision to absorb these costs rather than pass them on to our distribution partners abroad. ”