The Potential Impact of Brexit on the Electronics Industry
Imposition of Tariffs on Components and Products
Another vital aspect of the single market is the lack of tariffs when moving goods across EU borders. Once the UK leaves the EU, a trade agreement needs to be reached which will specify the new rules for import and export. However, as no agreement has been arranged so far, the new rules are unlikely to be as beneficial as the old ones.
This means that there is a high chance that substantial transportation tariffs will be imposed on goods, including electronics. This will particularly affect consumers, as the increase in shipping costs for the production of electronics will likely need to be offset by raised prices. And shipping during the production of electronics isn’t the only occasion where tariffs may affect prices – shipping costs will also increase when ordering electronics online where distributor warehouses are located in the UK and products need to be shipped to the EU or vice versa.
In preparation for both the potential restrictions on the free movement of goods and the imposition of tariffs, many distributors are purchasing increased stock from suppliers likely to be affected by Brexit. Richard Humphreys, Senior Operations Manager at EAO, has noticed this particular effect: “Even though our supply chain is based in Switzerland, Japan, the Philippines and the USA, we have noticed increased lead times due to increased worldwide demand for our products. We are thus recommending our distributors increase their stock of our products as a buffer to any border or courier delays we may or may not experience.”
Access to Skilled Labour
The electronics industry has a particular need for highly skilled labour to ensure its continued success and growth. Included in the single market is the free movement of labour. With future unknown restrictions in place, it is uncertain whether the industry will continue to be able to source its workers from across both Europe and the UK without further difficulties. This may lead to qualified workers with particular skill sets being unable or unwilling to be utilised where they are most needed.
It remains to be seen how the UK will approach this topic, as restrictions on immigration were a key issue in the Brexit referendum campaign. However, the electronics industry in the UK has a lot more at stake when it comes to skilled labour than its EU counterpart. New immigration restrictions may deter especially young professionals who would otherwise be keen to move across Europe from working in the UK, leading to the UK becoming more insular.
Neil Harrison, CEO of Distrelec, a leading European distributor of electronics, automation and measurement technology, addresses Brexit head-on: “As an EU-based distributor with warehouses in Switzerland and the Netherlands and with the vast majority of our customer base located in the EU, we are perhaps better positioned than most when it comes to minimising any Brexit disruptions to our customers. However, Distrelec’s success is largely built on the shoulders of our employees and we have taken measures to ensure we can continue to rely on finding the right person for the right position. From our offices across Europe and our Enterprise Hub in Manchester, we will continue to innovate and find original solutions to new scenarios like Brexit.”
Another vital aspect of the single market is the lack of tariffs when moving goods across EU borders. Once the UK leaves the EU, a trade agreement needs to be reached which will specify the new rules for import and export. However, as no agreement has been arranged so far, the new rules are unlikely to be as beneficial as the old ones.
This means that there is a high chance that substantial transportation tariffs will be imposed on goods, including electronics. This will particularly affect consumers, as the increase in shipping costs for the production of electronics will likely need to be offset by raised prices. And shipping during the production of electronics isn’t the only occasion where tariffs may affect prices – shipping costs will also increase when ordering electronics online where distributor warehouses are located in the UK and products need to be shipped to the EU or vice versa.
In preparation for both the potential restrictions on the free movement of goods and the imposition of tariffs, many distributors are purchasing increased stock from suppliers likely to be affected by Brexit. Richard Humphreys, Senior Operations Manager at EAO, has noticed this particular effect: “Even though our supply chain is based in Switzerland, Japan, the Philippines and the USA, we have noticed increased lead times due to increased worldwide demand for our products. We are thus recommending our distributors increase their stock of our products as a buffer to any border or courier delays we may or may not experience.”
Access to Skilled Labour
The electronics industry has a particular need for highly skilled labour to ensure its continued success and growth. Included in the single market is the free movement of labour. With future unknown restrictions in place, it is uncertain whether the industry will continue to be able to source its workers from across both Europe and the UK without further difficulties. This may lead to qualified workers with particular skill sets being unable or unwilling to be utilised where they are most needed.
It remains to be seen how the UK will approach this topic, as restrictions on immigration were a key issue in the Brexit referendum campaign. However, the electronics industry in the UK has a lot more at stake when it comes to skilled labour than its EU counterpart. New immigration restrictions may deter especially young professionals who would otherwise be keen to move across Europe from working in the UK, leading to the UK becoming more insular.
Neil Harrison, CEO of Distrelec, a leading European distributor of electronics, automation and measurement technology, addresses Brexit head-on: “As an EU-based distributor with warehouses in Switzerland and the Netherlands and with the vast majority of our customer base located in the EU, we are perhaps better positioned than most when it comes to minimising any Brexit disruptions to our customers. However, Distrelec’s success is largely built on the shoulders of our employees and we have taken measures to ensure we can continue to rely on finding the right person for the right position. From our offices across Europe and our Enterprise Hub in Manchester, we will continue to innovate and find original solutions to new scenarios like Brexit.”
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