Paul McFadyen, founder of West Yorkshire-based online supplier of metals, plastics and engineering products metals4U, talks stockpiling, EU staffing and how he craves some certainty on how Brexit will playout
What preparations has metals4U made for Brexit?
We are an online supplier of metals, plastics, and engineering consumables, mainly to the UK market and we are the market leader in the UK. We’ve made several changes to our business in preparation for Brexit.
We dramatically increased our stocks in the run-up to the March and October deadlines and we are maintaining those stock levels so that, as we get close to a possible date, we can make sure that we have sufficient stock to satisfy our customers’ demands.
We’ve increased our stock by over 50%. We’re keeping it at maximum capacity, we literally can’t squeeze anything else into the warehouse. And we are just about to finish an extension to give us even more space, so that in the new year we can hold even more stock. It’s not hit our cash flow, but it obviously has taken up a lot of cash.
Do you source any of your products from the EU?
The majority of goods that we sell are produced outside of the EU, but quite a lot of that comes through the EU. It’s really really difficult to plan for something when you don’t know what it is you’re planning for. We’ve got several scenarios depending on what sort of deal we come out with. If it’s a hard Brexit then we will then be sourcing those products direct from the manufacturing countries, China, India and the Far East and go with World Trade Organisation tariffs. If it’s a soft Brexit then it will probably be beneficial for us to continue to buy these goods through the EU.
Have your suppliers outside the EU been supportive of your need to possibly find new routes?
They have as little information as we have as to what the outcome is going to be. But, in a lot of cases, the EU is their largest export market and the UK’s usage of their products is relatively small compared to the EU as a whole, so the UK takes second fiddle to the EU, with the EU being the bigger customer. Obviously, they do want to continue supplying to us and for us to buy their products, but the UK is not the priority, the EU is.
Do you have any EU staff who have been impacted by Brexit?
Yes, when the referendum took place over 10% of our workforce was from the EU. Now we have no one from the EU, the last person left to go back home two months ago. We tried as best we could to retain them, but there are two reasons why they ended up leaving: firstly there’s the uncertainty as to what’s going to happen with regards to Brexit, and secondly the value of the pound plays a big role. When you send your money home, you don’t get quite as much for it. It’s made the disparity between UK and Eastern European wages a lot closer.
Do you see any opportunities coming your way from Brexit?
Yes, because a lot of what we purchase is manufactured outside of the EU, if the UK can do a good trade deal with the countries that our manufacturers are based in, then we could see a fall in our cost prices, which we could pass on to our customers.
It’s very difficult for UK businesses, small and large to plan for eventualities when we don’t know what we’re planning for. Regardless of what the outcome is, it’s almost getting to a point now where we need to know one way or the other. The outcome of the deal becomes less and less relevant as time goes on. What becomes more relevant is that we have something to work towards and we have something that we can plan around because a lot of UK businesses are very strong. There are a lot of great entrepreneurs in the UK. We can find a way of coming out of this in a good place, but we need to know soon what we’re up against.