How will a no-deal Brexit affect prices, supplies and aftermarket services of UK-based dive equipment manufacturers?
“We just have to be prepared to be nimble,” said Jim Standing of Fourth Element. “We have such good relationships in Europe that I feel confident that nothing is insurmountable, other than macroeconomic factors like exchange risk, etc, and there’s nothing we can do to influence it, except to invent a time machine.”
Assuming that the United Kingdom leaves the EU without a deal on October 31, some manufacturers have made contingency plans to mitigate possible disruptions or cushion an economic impact.
Fourth Element has looked at establishing short-term warehousing within the EU, which will mitigate some impact until the end of the year, and are also considering longer term storage in the EU.
Weezle is constructed in the United Kingdom, so their import worries only relate to importing from the United States, from which they purchase one of the fibres that they use. The company stated it has many good customers in Europe, whom they have reassured they will be able to support and supply whatever the outcome. “We have been developing other markets within the United Kingdom and outside the EU to assist us over the turmoil that Brexit is likely to cause us,” wrote Hilary Child of Weezle.
AP Diving, manufacturer of the Inspiration rebreather and Buddy BCD ranges, stated that since it already exports its products all over the world and its staff are well experienced in shipping to non-EU countries, it expects exports to EU countries to become slightly different but “still easy enough”.
AP has nonetheless made arrangements in the areas of CE product certification and EU Export Control licensing, explained Martin Parker, Managing Director of AP Diving. As the UK-notified bodies for CE approvals will lose their notified body status when the United Kingdom leaves the EU, CE approvals of AP products have been transferred from SGS United Kingdom to SGS Finland. This means that CE numbers have been changed on all products and their certification is ready for Brexit.
Regarding AP Diving’s range of rebreathers, they are “dual use” products with military as well as non-military applications. As such, they have restricted destinations, except when accompanied by their owners. AP Diving is licensed by the UK Export Control Organisation (ECO) to sell products to many destinations with appropriate declarations on the paperwork and appropriate and auditable records.
While the United Kingdom is a member of the EU, no export license is required to sell products within the EU. But once Britain comes out of the EU, an export license will be required. The ECO has been very proactive in creating the new license and processing applications, and this license was already granted to AP Diving in February 2019; it comes into force in the event of a no-deal Brexit.
Will Brexit affect consumer prices?
“Yes, it will affect pricing,” wrote Standing at Fourth Element. “Every barrier to trade increases costs, but we have worked very hard to keep the changes to a minimum. To be honest, we still don’t know the likely conditions, but we are determined to keep the costs down.”
Until the trade negotiations are complete, the current tariffs stand for two years. “What happens, we will watch with interest to see the effects,” wrote Child at Weezle. “As we already have good trade with countries outside the EU, we have the necessary company, HMRC, export paperwork and accounting systems set up.”
“It is clear, most manufacturers desire tariff-free trading,” wrote Parker at AP Diving. “If tariffs are applied, I would expect them to be in the region of two to seven percent, but this is just guesswork on my part. But tariffs of this order are easily off-set by the devaluation of the pound. The devaluation of the pound, of course, has resulted in a surge in demand, and most customers want the delivery before the Brexit deadlines.”
Will repairs, returns and other aftermarket services be affected?
“It’s possible, but we have repair facilities across Europe and further afield,” wrote Standing at Fourth Element. “It may delay some returns being processed, but we have a pretty good relationship with our dealers, and we will work with them to ensure that these delays do not affect the consumers, or at least do so as little as possible. Fortunately, everyone in the industry is in a similar situation, and as an industry, I think we are pretty good at working these things out together. I’m sure there will be challenges, but we have many years of trust built up with our partners in Europe—we are all motivated to work it out.”
Child at Weezle wrote: “Not in the least. We will still offer repairs, if and when required. The Weezle goods have always had to come back to us here in Yorkshire, for any alterations or a ‘1000 dive service,’ as they need to be done, by our seamstresses—that won’t change.”
Parker at AP Diving wrote: “To start with, I think delays at the border will be inevitable, but there has been a lot of contingency planning to reduce delays. Our export license for returning serviced items is already in place and will become active in the event of a no-deal Brexit.”
It is clear, most manufacturers desire tariff-free trading