Brexit Case Study: Moflash Signalling
Moflash Signalling Ltd
This case study is part of the Greater Birmingham Chambers of Commerce Brexit toolkit. Our Business Brexit Toolkit sets out suggestions for how businesses can get “Brexit ready”, facts and stats on Brexit and the region’s relationship with the EU and our asks for stakeholders on both Brexit negotiations and the domestic policy changes that businesses need to thrive. For more information click here.
When considering the impact of Brexit on our business, we identified the following as the main concerns of a hard Brexit: the effect on sterling, the tariff level applied on exports to the EU and disruption in the movement of goods across the UK/EU border.
If we conclude that a hard Brexit will be the likely outcome of the current negotiations, these three issues need to be planned for.
Since the vote, Sterling has fallen by 15% thus making our products more competitive in the export markets and more difficult for imports to compete against our products. This is demonstrated in the sales growth in 2017. In the event of a hard Brexit, we do not feel that Sterling will strengthen.
If hard Brexit is the outcome, we can assume that the EU will impose import tariffs on our products. Currently, in other parts of the world, an average would be between 1-3%. Therefore, we cannot see the EU imposing tariffs higher than a worst case 5%, this is not to say that on other goods or industries it would be so favourable. However, given the fact that Sterling has fallen well below our worst scenario, our products would still be more competitive than before the vote.
It is expected that unless a Norwegian/Swedish border control type system is put into place, disruption will be caused at ports and airports across the UK. Moflash currently sells its products via distribution partners based in most EU countries, with the exception of Germany which is a Moflash sales office location serving Germany, Austria, Switzerland and parts of Eastern Europe. This has been in operation for four years and has proven successful.
Given the fears on movement of products, we are considering opening a new office in France which would service France and the low countries, as well as Italy. This would include warehousing which would also provide distribution of goods to the German operation as well as a central store for the remaining distribution partners. The number of partners will be reduced to create what we are calling super-distribution points. For example, in Scandinavia we had four partners who will now be reduced to one who will service the other three partners as sub-distributors. By doing the above, we reduce shipments to bulk movements, reducing potential disruption.
Simon Evans MBE, Sales & Marketing Director, Moflash Signalling Ltd
Moflash are an independently owned manufacturer of visual and acoustic signalling devices for use in automation, fire and security, oil and gas and general warning markets. The company enjoyed growth in 2017 of 19% on the previous year, with sales split 65% export and 35% UK. The company’s largest market outside of the UK is the EU but also exports to the Middle East, Africa, Australasia and North America.
Click here to access the Chamber's Brexit Toolkit.