Brexit Contingency Planning.
How GWP plan to mitigate any potential impact Brexit may have on packaging supply
Since June 2016 and the United Kingdom (UK) referendum vote regarding membership of the European Union (EU), there has been considerable concern regarding the implications for business. In particular, how any agreement (or lack thereof) may affect supply of goods and trade.
Due to this concern & uncertainty, GWP Group has been working to both assess and mitigate any potential impacts that ‘Brexit’ may have on our customers and wider supply chain. This analysis covers a number of differing potential outcomes.
This article, along with the downloadable Brexit Policy statement (please see below) has been created in order to provide information to GWP customers and suppliers on what we have done – and are preparing to do – in these outcomes.
Risks posed by Brexit
Although GWP arguably face less exposure to any potentially negative consequences of the UK’s withdrawal from the EU than other businesses, there are still a number of points that must be taken into consideration.
GWP Group is a UK based business, headquartered in Wiltshire. More than 98% of our sales are made to UK customers. The business has 2 manufacturing sites, both of which are located in the UK, which employ over 100 staff. All of these employees are based in the UK. We have a small number of EU nationals working at our business.
However, it could be strongly argued that it is in the interest of both the UK and remaining EU nations that the UK’s departure from the EU is carefully managed. This may require a period of transition and some form of agreement for free trade.
As there is no certainty (at the time of writing) that any such agreement will be reached, GWP Group is preparing for the possibility that the UK leaves the EU with neither a transition period nor a free trade agreement in place.
The key area this could impact would be the supply of raw materials to partners in our supply chain, which could indirectly lead to shortages of the materials we ourselves use (namely corrugated cardboard, foams, plastic materials, inks, coatings and other finished products) in manufacturing of our packaging products.
Whilst there are significant challenges involved in preparing for a no-deal outcome, GWP do not believe that the direct risks of a no-deal Brexit pose a material threat to the ongoing operations and profitability of our business.
Regardless of this, GWP would not want to understate the work we are doing to prepare for this eventuality.
GWP Planning for Brexit
In order to ensure that our business is sustainable, we have put plans in place to minimise potential disruption, mitigate any difficulties and to ensure the best outcome for our company and our customers as the transition away from EU membership takes place.
In preparation for the forthcoming events relating to the scheduled departure from the EU on 29th March 2019, GWP Group have and will continue to both monitor and evaluate information provided by the government, media, customers, suppliers and our own staff to ensure that we minimise any risk to our customers and ourselves.
This approach will also ensure that we have the broadest and most up to date view of the likely impact of all potential Brexit scenarios, both on our business and on those with whom we do business.
Specific measures GWP are taking
Whilst we already have flexible UK based production capacity in place, we have and / or will also endeavour to:
Build stock of finished goods as appropriate
Keep a stock holding of raw materials
Have additional 10,000 sq. ft. warehouse space available for additional stockholding (available from November 2018)
Invested in new Bobst die cutting equipment to allow for higher volume and more flexible manufacturing capability
Ensure our staff are able to undertake any increase in corporate customs infrastructure
Map and audit supply chains to minimise disruption (currently 95% UK based supply chain)
Audit any international contracts as appropriate
Ensure adequate cash flow for VAT and additional inventory.
Develop a contingency plan (e.g. alternative shipping arrangements).
Continue to be aware of our employees nationalities to ensure after Brexit all are employed legally and their rights understood.
New Warehouse Facility
One of the key plans GWP have put into place in order to mitigate any impacts from Brexit is the investment in a new storage and warehousing facility at our Cricklade site.
The new 10,000sq ft. unit was completed in November 2018, and complements the existing 65,000sq ft. across two units already on the site.
Besides helping to maintain the success of GWP Groups’ successful Just In Time (JIT) supply service, the additional space will also be used for helping to store buffer stock of both finished packaging products and raw materials, to minimise disruption if certain Brexit outcomes are realised.
For further details of this investment and what it means for the continuity of your packaging supply, please click here.
What is Brexit?
Whilst it has dominated the news and media for the past 2 years, as a brief overview Brexit is effectively short for “British Exit” – the United Kingdoms decision to leave the European Union (a group of 28 countries that allows for free trade and movement of citizens).
Following a public vote which took place on Thursday 23rd June 2016, fifty two percent of the voters opted to leave, with negotiations on the exact terms of this withdrawal having been negotiated in advance of the proposed leaving date on 29th March 2019.
With a provisional agreement between the EU and the UK having been voted against by British MPs (who must also agree the “deal”), the current situation on how the withdrawal agreement will eventually look (if indeed one is agreed) is still uncertain.
GWP Groups’ plans for Brexit
Whilst GWP Group recognises that there remains significant uncertainty around the eventual political and legal outcome of the Brexit process, based on our current understanding we feel that Brexit will not generate unmanageable risks for either our business or for our customers.
We believe that our flexible, customer-centric business model will be able to adapt and respond to the likely added complexities from Brexit. In the event of tariffs being introduced on trade between the UK and EU, the financial impact will be limited to our raw materials supply (via our current suppliers of such products).
However, should you wish to discuss any specific concerns you may have, please contact your account manager who will be happy to assist.