Begbies Traynor Group

What does Brexit mean for manufacturing in the Midlands?

Manufacturing (2).jpg
Date Published: 04/02/2021

The Brexit deal has provided welcome relief from uncertainty for many UK businesses, but for manufacturers in the Midlands it is a crucial boost to confidence. This is a major sector in the area and would have been badly affected by a ‘no deal’, so what does Brexit mean for manufacturers here?

It is good news in many respects – ‘no tariffs’ being a headline issue – but there are some common areas of concern for manufacturing businesses, including the potential for disruptions in trade and additional red tape.

Zero tariffs

Zero tariffs are a major element of the last-minute deal with the EU. The automotive sector, in particular, has a huge presence in the Midlands and manufacturers typically operate under small profit margins.

The fact that a zero-tariff Brexit deal has been agreed means automotive businesses can move forward with more confidence, and without the debilitating taxes and fees that might otherwise have been applied.

Trading with the EU

Food manufacturing is another a significant sector in the Midlands and, like the automotive sector, relies on a smooth supply chain to be able to meet contractual arrangements. With additional paperwork and physical checks being required post-Brexit, delays at the border could interrupt the import of goods and materials.

Any disruption to the supply of goods and materials from the EU could delay the manufacturing process, so some manufacturers might decide to source supplies closer to home to avoid both potential border delays and burdensome administrative requirements. 

Additional paperwork for manufacturing businesses

Customs paperwork will be more onerous following Brexit. Under the Rules of Origin, however, manufacturers in the Midlands and throughout the UK can self-certify goods as eligible for zero tariffs.

The deal affords businesses a 12-month transition period during which to collect the necessary paperwork to prove that goods are locally sourced and, therefore, qualify for zero tariffs. This will help manufacturers who have complicated supply chains – carmakers being a significant sector in this regard – to meet their obligations under less pressure, and absorb the new requirements into their administrative procedures over a longer term.

Brexit and manufacturing in the Midlands

The long-awaited Brexit deal brings hope for manufacturing businesses in the Midlands, along with some causes for concern. Navigating possible trade disruptions and a greater administrative burden are two areas that could prove testing.

Given the high levels of regional employment this industry provides, however, the fact that businesses in the Midlands can continue to trade without onerous import and export tariffs is a major deal in itself.

It is advisable to seek early guidance on the implications of Brexit for your business. Begbies Traynor Group provides unbiased professional support to businesses industry-wide, and can offer a free same-day consultation.

About The Author

Meet the Team

Gareth is a Partner based predominantly in our Birmingham office but covering the whole Midlands region, a Fellow of the Association of Chartered Certified Accountants and a Licensed Insolvency Practitioner.  He joined the firm in 2004 having started his career in 2000 and therefore has many years’ experience in corporate advisory and restructuring in distressed businesses.

The majority of Gareth’s career has been spent advising company directors and business owners experiencing financial distress.  He has also worked closely with the main clearing banks and other financial institutions undertaking advisory work and independent business reviews as well as formal insolvency assignments.

Gareth has previously been seconded to work in one of the main clearing banks where he worked with customers in financial difficulty ranging from small SMEs to listed PLC businesses with multi-bank syndicates.

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