The electrical wholesale distribution market in the UK is made up of numerous complex supply chains. With Brexit moving forward, these important relationships across the EU could be at risk.
The EU is the world’s largest economy accounting for 44% of the UK’s exports for products and services. The UK’s decision to leave the EU, therefore, could cause issues for intermediaries who are only registered in the UK. This is because once Brexit is complete, these businesses may no longer be permitted to participate in distribution activities with EU27 intermediaries in respect of EU27 risks, and vice versa.
Having surveyed wholesale and distribution managers across the UK, OGL Computer found that insecurity around Brexit is currently the biggest factor affecting company profitability. Indeed, 47% of those surveyed cited it as one of their top 3 reasons followed by employee costs (44%) and inaccurate data (38%).
So what challenges are electrical wholesalers likely to be facing post-Brexit?
Trade will be impacted by Brexit and electrical machinery and appliances are one of the top 10 goods that we import from and export to the EU. We export £6.4 billion worth of electrical goods to the EU and import £11 billion each year. These figures have already taken a hit with imports of electrical machinery falling by £2.9 billion.
The trade agreement that the UK makes with the EU before completing Brexit is vital. While a hard Brexit is looking less likely, it’s important for electrical wholesalers to be prepared and invest wisely in stock.
Despite the uncertainty that has surrounded Brexit, the outlook for the UK electrical wholesale market is bright and it is expected to continue growing. Indeed, once negotiations are complete and a trade deal is done, electrical wholesalers are expected to quickly recover and grow by 14% in 2021.
With this in mind, electrical wholesalers looking to maintain growth will need to focus on keeping costs down and sourcing raw materials from the EU at competitive prices. Technology could also be key for those looking to streamline processes and become more profitable.
Following Brexit, there is likely to be a change in customs and indirect taxes (VAT for imports/exports). It’s important for electrical wholesalers to stay up-to-date with paperwork and documentation if they want to be able to adapt quickly to any changes as selling products within the EU will be impacted.
The UK and EU are also likely to have different health, safety and environmental standards going forward. It will be important to ensure that products comply with both following Brexit.
Labour may become more costly given that 9% of the UK wholesale and retail trade workforce are EU nationals many of which work longer hours on a lower wage. There is still uncertainty surrounding what will happen to EU citizens working in the UK after Brexit but wholesalers are reporting that labour costs are the biggest factor affecting their profitability.
Again, implementing technology that can streamline your processes and increase speed and efficiency is an excellent way to boost profitability plus it can help you to monitor employee performance.
Most of us are fed up of hearing about Brexit, however, the end does now appear to be in sight and it’s important for electrical wholesalers to be aware of how it will impact them. If you’re prepared for these challenges, you will be able to quickly adapt and thrive in a post-Brexit market.
About Bridgewater Professionals
Bridgewater Professionals specialise in recruitment for jobs within the wholesale, distribution and manufacturing industries, recruiting highly skilled individuals at all levels across the UK and Ireland.
If you’re an electrical wholesale, distribution or manufacturing professional interested in developing your career, get in touch with us today.
