Brexit: as we Head for a ‘No Deal’ Brexit what our customers need to know.

15th August 2019
3D illustration of Brexit referendum UK (United Kingdom or Great Britain or England) withdrawal from EU (European Union).

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We may have experienced a period of hiatus while Parliament attempted negotiations with the EU and now a new government taking shape, it would seem that we’re heading for a ‘No Deal’ Brexit and all advice is to make preparations.

Pricing of products should not increase as Computer items are not subject to any import Tariffs. But a plummeting Sterling Value will mean that prices will increase as all Computers are originally priced in US Dollars. The last Sterling drop in 2017 led to Apple increasing price by 15%.

Plans are being made by our suppliers, and us, to ensure that stock availability is high and delays kept to a minimum, but logistics companies are anticipating that there will be delays at ports.

Stock holding will be increased over the initial peak period which will, hopefully, avoid short term shortages of stock. Many suppliers are increasing their Warehousing capacities in order to manage stockholding capabilities.

We recommend that our customers speak to their account managers to discuss predicted requirements for November/December so that we can ensure maximum availability.

Assuming that the UK does exit the EU with no deal, it’s likely that the Irish market will be significantly affected due to the complex border issues there. This will be the most difficult area in which to maintain timely supply to customers, but HardSoft will do everything we can to protect our high supply and delivery standards to Ireland.

Read on to find out what our Co-Founder had to say about Brexit in January 2019:

How are you preparing the business?

We are anticipating supply issues. We have agreed with vendors stocking models that will mitigate some aspects of the delays. We have also ensured that HardSoft has increased local configuration facilities in place to mitigate the, at times frustrating, channel tendency to configure a unique SKU from the vendor (generally manufactured within the EU at present). In real terms, we will move to upgrade components where we can ourselves rather than rely on a finished product from the manufacturer.

How will leaving the EU affect the supply of Apple Products?

Apple does not hold much physical stock in the UK. Warehousing is in Ireland, which may be a problem. To mitigate issues we are holding more stock and the UK distribution channel for Apple has increased warehousing by some 500,000 sq ft. to hold more stock. This won’t be helpful for ‘CTO’ products that are built directly in China, then shipped to Ireland, then back into the UK. This may mean significant delays to deliveries. Customers are advised to think ahead and plan in such delays in these specially built models.

Does this affect pricing?

We believe it won’t do as there are no global Tariffs on computer goods and components. Therefore, if the UK exits without a ‘deal’ and we trade under WTO rules, then there should be no additional tariffs to pay. If however the value of £/Sterling changes then it’s likely there would be a shift in pricing. Back in 2015, Apple increased prices by circa 20% because of currency changes. Common components such as RAM are priced daily against the $/US Dollar. This may see an immediate impact if the £/Sterling starts moving downwards.

What advice would you give HardSoft’s customers?

The British Chamber of Commerce has produced a thorough Brexit Checklist and we have found this a constructive way of enabling us to review all the no deal issues that may arise. The checklist can be found at https://www.britishchambers.org.uk/page/brexit/business-brexit-checklist and we recommend our customers use this. The checklist provides plenty of links to other official guidance. Your local Chamber of Commerce should also be of help for specific queries.

What do you think this could mean for small businesses?

To many, a fear will set in and we believe ‘cash’ will become tighter and normal cash flows may decline. Our business is built around offering Leasing solutions to business and we expect an increase in business as customers protect their cash and move to other solutions to acquire equipment.