Two-thirds of food businesses to move supply chain out of UK

06-Nov-2017 - Last updated on 06-Nov-2017 at 14:02 GMT

Two-thirds of EU businesses expect to move their supply chain out of the UK due to Brexit

Related tags Supply chain European union

Up to two-thirds of EU businesses, including food and drink manufacturers, expect to move their supply chain out of the UK due to Brexit, according to a survey from the Chartered Institute of Procurement & Supply (CIPS).

In a survey of 1,118 supply chain managers, 63% said they expected to move some of their supply chain out of the UK, compared with 44% in May.

The survey also found that 40% of UK companies with EU suppliers have begun to search for domestic suppliers, with just over a quarter (26%) investing more time in strengthening their relationships with suppliers on the continent.

The shift comes as half of UK businesses said they were becoming less confident that the UK and EU will secure a deal which continues to offer ‘free and frictionless trade’.

A further 35% of UK businesses said they felt unable to prepare due to the lack of progress on a future trade relationship.

‘Already too late for scores of businesses’

CIPS group ceo Gerry Walsh said: “The [government’s] Brexit negotiating team promise that progress will be made soon, but it is already too late for scores of businesses who look like they will be deserted by their European partners.

“British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together.”

The lack of clarity over Brexit negotiations – with deals being made behind closed doors – was not filling British businesses with confidence, claimed Walsh.

He added: “The success of the negotiations should not be measured on the final deal only, but on how quickly both sides can provide certainty. The clock is ticking.”

Difficult to secure contracts

CIPS found that 20% of UK businesses with EU suppliers have found it difficult to secure contracts that run after March 2019, the day the UK officially leaves the EU, because of this uncertainty.

Nearly one in 10 (8%) of UK businesses said their organisation had already lost contracts as a result of Brexit, while 14% believed part or all of their organisation’s operations will no longer be viable.

A quarter (25%) of UK businesses with more than 250 employees said they have already spent at least £100,000 preparing their supply chain for the split. However, only 14% of UK businesses with EU suppliers said they were sufficiently prepared for Brexit.

FoodManufacture.co.uk has asked the Department for Exiting the European Union for a response to the survey.

Meanwhile, food manufacturers and retailers in the UK need to start preparing their contingency plans for a ‘hard’ Brexit – in which no deal is agreed with the EU – in order to mitigate the risks they face, warned a leading supply chain expert.

2 comments

Firstly you need a stall to set

Posted by JOHN MARTIN, 07 November 2017 - 00:09 GMT

The infrastructure to just instantly increase production in all industries(not just food processing) is long gone in the UK, and we would also require large amounts of skilled and unskilled workers to be brought in to facilitate this expansion, not forgetting the issue of trying to eke out more productivity from the existing setup, which has come to a grinding halt due to stagnant wages and inflation ....I'm guessing you have a magic hat?...its not just about the management, its also about resources, many of which come from the continent, including investment and innovation. BREXIT will be a major step backward for the UK, it will take a minimum of 20 yrs to just recover the lost ground, good luck with that then ..

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Sort your stall out

Posted by james simpson, 06 November 2017 - 16:34 GMT

I read your article "two thirds of food business to move supply chain out of UK because of Brexit." I'm only a lowly engineering manager but why are these leaders not already preparing for the prospect's ahead. Get of your butts and start preparing, if for nothing else but the worst case scenario. NO DEAL. Start growing our own cereal crops, increase live stock rearing, dairy production. That way we are helping the government fight for a deal. Due to the fact we will be less reliant on imports. Both parties need each other. But the UK can be self sufficient if you business leaders start leading. Be a shepherd not a sheep. Its not difficult, its common sense.
Stop listening to the doom merchants from the city. The only way out of this mess if to manufacture. Financial services got us way into a lot of this mess and they want us to listen to them to allow the city to get the deal it wants at the expense of food manufacturing, and manufacturing on a whole.

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