Could There be Challenges for Construction Post-Brexit?

Stuart Dantzic is Managing Director of Caribbean Blinds, in this feature he talks about how he thinks the construction industry will be affected by Brexit.

As the United Kingdom embarks on its final stages of exiting the EU single market and customs union, the entire population is ensuring all measures are in place in preparation for the new rules that will be introduced from 1^st January 2021.

In addition to European travel being affected, UK citizens and businesses face major uncertainty, with many still unaware of the full extent of the possible implications on their industry.

Throughout the entire campaign, the construction industry displayed mixed views on the prospect of the UK’s departure from the EU, with specific concern about how it might affect the skills shortage, the import and export of materials, and regulations and standards. Whilst the industry must come to terms with the reality of the situation, we can still aim to be fully prepared for the challenges (as well as any opportunities) that Brexit will bring.

Supply chain

One of the single biggest challenges the construction industry will face following the UK’s exit from the EU will be to keep the wider supply chain flowing seamlessly. Maintaining a strong line of communication with key European suppliers will be vital in safeguarding against disruption to production, lead times and importantly, costs.

By considering an increase in stock holding levels, firms will not only be able to help limit potential delivery delays caused by stricter border control, but also allow for the opportunity to reduce transport costs (more raw materials in a single shipment) which can offset tariffs imposed on incoming goods.

Partnerships

Companies should also look to source parts from UK suppliers where possible, not only to minimise disruption but also to help support the UK economy. When it comes to sourcing raw materials, partnering with another firm in your sector can help split any ‘set up’ costs, reducing unit costs (due to higher volumes) and therefore increasing margins.

Furthermore, enhancing your product/service offering by recommending or working with companies in ‘complimentary’ sectors will help increase both brand and product awareness, growing sales and providing customer convenience as a result.

Imports & exports

It is likely that the construction industry will face specific duties or quantity limits on imports and exports post-Brexit. Although this could lead to a shortage of materials or alternatively, an increase in costs, it could also spur a rise in demand for UK-made products and welcome an influx of support for UK based enterprises as production capacity rises. Businesses can also continue to focus on their best-selling products whilst removing any stagnant lines, streamlining entire ranges as a result, and all whilst improving cashflow.

Short lead times on UK manufactured goods, combined with the possibility of relaxed planning on building works (such as extensions), could see an increase in home improvement projects across the country. The potential surge in sales enquiries, conversions and orders that UK construction and building firms could receive, will in turn require the appropriate staffing levels across roles ranging from sales to production to installation, helping to reduce unemployment figures in the long term.

Although it is unclear whether Brexit will permit UK-imposed tariffs on cheap steel imports from China (that have previously led to the decline of the UK’s steel industry), it is feasible that the UK will be able to introduce public procurement policies insisting on the use of ‘UK firms and materials only’, and eventually negotiate and develop its own trade agreements with China, as well as other large importers such as the USA.

To summarise, predicting how Brexit will affect the UK construction industry remains fraught with challenges, not least because, for the time being, existing EU rules continue to apply.

However, Brexit’s impact on construction for the country as a whole will be shaped by negotiations between Member States and the UK, with the political declaration featuring as the starting point for discussions.

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