Simon recently was asked a few Brexit related questions for PCIAW Voice magazine. Below is the full article.
BREXIT: The never-ending questions
Following on from Adam Mansell’s wonderfully informative and expansive presentation on Brexit at the PCIAW® Summit in June and with the subject becoming more pressing by the day, we asked the Directors of the PCIAW® for their views on this most complex and sometimes divisive, topic.
How do you think Brexit will impact on your business and the industry in general?
Simon Hunter – Whether you are a Brexit fan or not, it is difficult to argue with the fact that it is a major change and one which carries considerable known or highly likely risks (£ versus $ or €, probable tariffs, additional costs for company’s coping with the changes, ease of access to EU labour, ease of access to buy or sell in the EU etc.) but with unknowable potential upsides (until individual trade deals are done there is not much we can know for sure).
Business does not like this uncertainty. Many businesses are known to be holding back on investment decisions as shown by IoD/CBI/CoC surveys over the period post the Brexit vote.
It is a fact that the £ has dramatically weakened against the $ and this will place a strain on the profits for many companies in our sector – most of us buy in $ in Asia and then sell in £ in fixed price selling contracts. This depresses profitability.
Hunter is a financially robust company; we have zero debt and are proud of having a 2A1 D&B rating with very strong and growing net assets year on year. This financial strength allows us to buffer against periods of challenge like Brexit, so we will be ok.
There are many companies in the market who traditionally try to win on lowest price, or who take too many risks and it is they and the companies that are most highly leveraged that will feel the greatest sting from Brexit. I think there will be another industry shake down in the next 12 months following Brexit and some in our sector will disappear.
Do you think that a “No Deal” Brexit will be as catastrophic as many seem to think it will be?
Simon Hunter – The Brexit vote has harmed all UK companies who buy using $ in Asia already.
The £ is continuing to slide daily, this is bad for every importer and most of us import.
A “No Deal” will for sure make doing business across the EU more difficult, and at least in the short/medium term challenge profits due to currency weakness and tariff and other implementation costs. However, I think business will always find a way to operate, the profit motive will ensure that happens. For some companies it will be a catastrophe though as Brexit will be the “stick that broke the camel’s back”.
Can you foresee job losses because of Brexit? (Not necessarily at your company but within the industry as a whole)
Simon Hunter – Our Company is strong and has being recruiting strongly. Not every company is in the same position.
I am contacted daily by head-hunter’s offering us staff who have been made redundant or who can see their company is weak and want to jump ship.
The British high-street has been under tremendous pressure for years for other reasons and Brexit is another problem on top of that, any company who does a lot of their business on the high street will be making reductions in staff numbers as their customers have had too also. It is not that I foresee this at all, it is just a fact that it is already happening.
Do you think the UK, or the EU will fair better in the aftermath of Brexit?
Simon Hunter – If there is a hard Brexit I am certain that in the short to medium term both sides will suffer for all the reasons already outlined. In the longer term it is impossible to know if either side will gain but there may be some gains for both sides.
If you could reverse the result of the initial referendum, would you?
Simon Hunter – Yes. I think that when David Cameron was in power and went to the EU to try and get an amended deal that the EU should at least have given him a “fig leaf”. I am certain they regret that they did not treat him better now, though I doubt they would admit this. A lot of pain could have been avoided for all sides.