Revealed: what the marine industry really thinks about Brexit

Alice Driscoll unpicks the results of Marine Industry News’ indicative survey about Brexit and finds that even though 80% of respondents sell into Europe, their readiness and optimism varies significantly.

“We have already had to cut our work force by 50% and lost thousands of pounds as a direct consequence of Brexit.”

A recent survey of marine companies reveals that 42% expect Brexit to have a detrimental impact on business activities in the short term, with nearly 50% anticipating a longer-term detrimental effect.

“It has been proven, beyond any reasonable doubt, that leaving the world’s largest single economic bloc will be detrimental,” says one respondent.

However, around a third believe that little will change in the short term. “It’s a big panic about nothing,” says one organisation, “just get it done and let us move on.”

Predicted effects

Over three quarters of the survey’s respondents buy products from the Eurozone, and over 80% sell into Europe, but concern about the effect of Brexit varied greatly amongst organisations depending on their specific area of activity.

“Our business involves the temporary importation of racing vessels for competition and training purposes,” says Peter Allam, CEO of Weymouth & Portland National Sailing Academy. “An additional layer of bureaucracy in the form of carnets, delays at the border and so on, may well discourage participants from travelling to the UK from the EU.”

For many organisations, the uncertainty of what will happen when the UK leaves the EU is creating concern. One yacht broker who works overseas says: “We cannot be certain what changes will happen re VAT or Visa requirements for liveaboards, and about non-EU flag boats being sold in the EU. These are the main issues but many more will arise.”

Others are more certain about the negative impact. “From a yacht sales perspective, EU buyers will have to pay an additional 20% VAT to import any used boats to the EU. This will result in an immediate 20% devaluation of all UK VAT paid craft.” But other respondents were more positive, saying: “I do not understand all the negativity surrounding the UK withdrawal from the EU.” Simon Sheehan, partner at Youboat Marine, says: “It’s a mountain out of a molehill.”

Advice from supply chains

Planning for Brexit has already taken both time and money for many companies. When asked “How ready are you in your preparations for Brexit?” the survey reveals while 8% have done nothing, 25% are ready, with 22% getting there.

Companies are using a variety of sources for advice on their preparations. Information from trade organisations such as British Marine, RYA, ABYA and the Recruitment Trade Association ranked higher than that received from the Government but lower than that received from contemporaries and from supply and distribution chains. One respondent says: “Our couriers have been the most helpful at keeping us informed.”

Graham Brown, MD of Sea Sure, says his company’s received a great deal of help from its couriers and freight forwarders. He’s worked closely with European distributors, particularly in Germany, to formulate a workable Brexit strategy. “We have a very close relationship with our distributors throughout Europe and our Brexit policy is based solely around meeting their supply needs,” he says.

“We’ve put a lot of effort into understanding the new INCO terms (International Commercial Terms) and in particular DAP, which stands for ‘Duty at Place’. Following Brexit, most people will be exporting either under DAP or Ex -Works terms. Understanding the difference is vital. Under DAP the receiver pays both duty and VAT when the products land at their destination. If you sell Ex-Works, then the customer picks up these costs when the goods leave your warehouse in the UK. These decisions can affect your customers’ cash flow and, in theory, if not fully understood who is responsible for what, have a significant effect on profit. This is because the VAT (due in the receiving country) is not reclaimable by the seller (in this country).”

Graham’s views reflect the main concerns of the organisations surveyed, with exchange rates (19%), tariffs (14%) and paperwork (13%) rating highest for what people are most worried about with preparing their businesses for Brexit.

Staff levels were the least concerning (2%) but Sean Roebuck of SeaDek explains that his staffing levels are affected because the company’s margins have suffered with the weak pound. “We would like to have invested more money in machinery and taken on another apprentice, but that’s been put on hold.”

Planning for the unknown

Investment in getting ready for Brexit varied, with 38% investing zero, 31% less than £5k and 5% between £5-10k.

“How can we plan for the unknown?” asks one responder. Sean Roebuck agrees. “We haven’t spent money on preparing for Brexit yet as we don’t know what we’ll need to do. We’ve had support from British Marine and taken the Government advice to go online to prepare, but there’s no real information there.”

Nine per cent say they’ve spent over £10,000 getting ready for Brexit. One company who’s already invested significantly says: “Totally useless UK government. They seem to understand very little about trade. We shall be moving the bulk of our operation into Europe.”

This response did not reflect the majority of views when companies were asked if they were planning to move some, or all, of their business location to the Eurozone. Only 15% are considering it, with 73% saying ‘no’. Many companies reflect a desire to “get it done as quickly as possible” while others pleaded “just make a decision and let’s crack on, either way”.

Graham Brown at Sea Sure is pragmatic in his response, “Business comes from what’s happening in the market, it’s not about Brexit. The market will decide, and we have to continue to produce products that the market wants at a price they are willing to pay.”

Many thanks to everyone who responded to MIN’s survey.

Percentages have been rounded to nearest percentage point. Anonymised quotes have been used from ‘other’ responses and ‘comment’ boxes. Attributed quotes were collated during and after the survey by author Alice Driscoll. Response rate (64) and can be seen as a snapshot rather than a statistically representative sample of the marine industry. Repeat data were cleaned prior to response rate analysis (multiple submissions of answer sets from singular respondent). MIN does not claim that this is statistically significant, however, it is indicative of the responses of an engaged marine readership.

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