South Coast Business Works debates the challenge and opportunities of BrexitHeat Profit
CHALLENGE, opportunity, risk.
All adjectives used to describe Brexit – the theme of the Echo-backed South Coast Business Works which took place at St Mary’s Stadium yesterday in conjunction with Trethowans, Destination Southampton and Hampshire Chamber of Commerce.
Around 300 visitors and 20 businesses took part in the event, networking, exchanging information and attending seminars to hear expert insight in to how Britain’s exit from the EU will impact on the regional economy.
Keynote speaker Mike Spicer, director of research and economics at the British Chambers of Commerce (BCC), said that result of the EU referendum in 216 had been followed by one of the biggest falls in the value of sterling in 25 years matched only by the 2008 crash and Britain’s exit from the European Exchange Rate Mechanism.
The upside of a weaker pound was that the UK’s goods became cheaper but Mike said that an expected increase in exports had not been as great as anticipated.
He warned that new customs agreements could result in a slower movement of goods in and out of Europe. He advised companies to get to know their supply chain.
Mike said that Britain’s economic growth was restricted by a labour and skills shortages – 80 per cent of employers in the region had experienced difficulties in recruiting in the last quarter – and the BCC was lobbying for an immigration policy which responded to economic need.
The BBC is also calling for clarification on VAT arrangements. “If the UK is leaving the EU VAT area does your company VAT upfront on goods imported from the European Union?” Mike asked.
Linked to the VAT question was the HMRC’s ability to deal with the upheavals of Brexit. Would the government Invest in more staff for the revenue?
“There have been problems with HMRC pre-dating the Brexit referendum,” said Mike. “You know you’ve got a problem when businesses are complaining that there are not enough tax officers!”
However, there were opportunities and benefits to come from Brexit, said Mike.
Sterling’s weakness had already led to a growth in ‘staycations’ with direct benefit to the south’s tourism industry. Mike also predicted more Investment in UK produced food and Investment from Europe into Britain in certain manufacturing sectors such as the production of new railway trains.
Speaker Paul Sandcraft, regional director of Aerospace, TW Metals said a no-deal Brexit would be a significant cause cause of concern to his business but he sounded a defiantly optimistic note: “We must focus, innovate and strengthen our supply chains. I believe for all of us that business will find a way. Businesses are agile and adaptable.”
TW, which has its UK base at Nursling, supplies metals to various sectors but the bulk of their business is with aviation companies. Fifty per cent of the metal they buy comes from Europe.
Post-referendum the weakened pound had caused TW’s costs to to rise by between 10 and 15 per cent – costs which TW had to absorb.
He said much of his time was now spent looking for new suppliers outside of Europe – mainly in China and India, which would mean longer lead times for products and higher transport costs.
He said TW was now moving to Brexit-proof the business and make it leaner and smarter.
Measures included exploring new Markets including food, green energy and medical and trying to buy and sell in the same currency to reduce exchange rate risk but hedging against the same risk by banking in multiple currencies.
In the warehouse, Paul said TW were looking at reducing costs and improving efficiency by employing driverless forklifts which could work 24/7.
Earlier in the day Simon Rhodes, partner at event sponsor Trethowans Solicitors, had welcomed people to the event and spoken about his area, employment law.
He said that businesses were suffering “people pressure”.
Simon said the Me Too campaign, which had spread from the film industry in to all sectors, the gender pay gap and issues concerning diversity in the workplace had combined to create “a perfect storm” for employers.
He said that that “businesses must engage with their individual workers not simply treat them as a resource”.
Visitors to the event also heard Geraint Davies – partner of EY and chairman of Hampshire and isle of Wight Institute of Directors give a talk on reasons for optimism in the regional economy and Lee Peck of Lee Peck Media chaired a question time session with a panel made up of Simon Rhodes, Mike Spicer, Geraint Davies, Robin Shepherd of planning and design consultants Barton Willmore, Harry Kutty, headteacher of Cantell School, and Annaliese Hughes, director of Delicious Dining and board member of Go! Southampton.
Topics coveredranged from the importance of culture to the city region’s economy to the issues around transport and the infrastructure to retaining graduates from the city’s two universities.
Simon Rhodes, senior partner with Business Works sponsor Trethowans, said: “A thriving city has to have a thriving city centre. More jobs create more prosperity so we must ensure we have more office space to enable businesses to grow and at the same time attract inward Investment.” He added: “More than anything, as a city, we need to ensure we are joined up in all our thinking.””
Geraint Davies, a partner with Ernst and Young in Southampton explained that he coined the term “Platinum Coast” to describe the wider region in the hope that it would capture people’s imagination. He said: “Solent City doesn’t seemed to have worked so perhaps we need something more striking like Silicon Valley which does a great job at identifying a particular region in the States. Our region has huge potential and we must be sure to realise it.” The head teacher at Cantell School Harry Kutty said one of the city’s priorities must be to stem the flow of young talent out of the area. “After all that is our future,” he said.
Robin Shepherd, partner with Barton Wilmore, the UK’s largest planning and design practice, struck an optimistic note. He pointed out that Southampton had enjoyed huge Investment in the last five years not least with the latest phase of WestQuay, which his practice had secured the planning for. He said the time had come to Invest more in the infrastructure so people could move more freely around the region.
Address the problems with the transport and infrastructure, Mike Spicer, director of research and economics at the British Chamber of Commerce said: “Investment in the transport links was long overdue,” But added: “Congestion is one of the symptoms of growth and without doubt Southampton is going to be one of the fastest growing cities in the UK this year.”