It’s a long one, bear with me!
For those of you who don’t know the movie, Gwyneth Paltrow’s character prises open the door, gets on the train, gets home early and finds her boyfriend with someone else. The alternative story running in parallel is she misses the train and her life turns out very differently….
So, one week on, regardless of whether or not you voted to get on the train heading out of Europe or stay on the platform, we are on it, only we’re stuck at the station with no driver and the map has changed!
I spent a lot of time this week talking to leaders and business owners in the region, some of whom are my Clients to get an idea of what the feeling was and if there had been any impact so far.
Amongst the people I spoke to were an SME Project Management Consultancy, A Roofing Contractor, Commercial Property Consultant, Public Sector Procurement organisation, Architects, Contractor, large Construction Consultant, Low Carbon Building Technology SME and a PR Consultant. I’ve broken it down into the key areas of the conversations.
The majority of the people I spoke to had voted to remain and the consensus was no one was really prepared for it and it was too soon to tell. The roofing contractor, as well as being cautious was excited in a roundabout way about what the future holds. The one who had voted to leave didn’t do so because of immigration but because of the EU’s unwillingness to recognise and address key issues affecting our country and to release our powerlessness at being able to influence their decisions, to, ‘paddle our own canoe’ in the direction we want to go.
The Commercial Property Consultant had seen 2 commercial projects put on hold following Friday’s decision which is being funded by mainstream banks who are getting nervous. The Project Management Consultancy also expressed concern around commercial developments. There was a difference of opinion on housing, with concern around share prices falling in the market although the PM Consultancy was not as concerned with the house building market.
There is a concern around big developers relying on investment funds slowing down due to a lack of decision making and there is also the hope that government will learn lessons form the previous recession and continue to invest in infrastructure.
Short term impact
Most reported Business as Usual, and the need to not have a knee-jerk reaction. There has, however been a short-term impact on supply chain. A specialist supplier procuring a stainless steel swimming pool from a European supplier had been hit by a 5% hike in cost due to the falling pound. I’m sure there are lots of examples of this throughout the region.
There had also been concern around whether projects with European funding would proceed, however, following a conversation with a consultant around ESIF and ERDF funding there is assurance that these funds are running until 2020 the allocation of which is being controlled by the Government.
Markets are the key driver, if markets go down there is less investment and income but it’s too early to know if people will not invest and delay decisions but the more scare mongering there is, the worse it gets.
Long term impact
From a public procurement perspective, it won’t impact immediately on European funding but will in 2-3 years. There will also be an impact on supply chain as 60% of materials are procured in Europe. One of the Architect firms I spoke to said that they generally had around 12% non-UK EU Internationals who were concerned about what the future would be for them, one of which has applied for citizenship.
The general consensus was, whilst we have an idea of potential areas of risk, until we are out of the current state of limbo, we just don’t know.
So, what can we do now?
These are just a sample of what we are all experiencing regionally but the overall message from everyone I spoke to is carry on with business as usual. Carry on investing in staff as much as you can for as long as you can. There is a challenge with materials from the continent but there is still an apatite to trade. Look at risk, keep things moving, engage with the financial community, what we need now more that ever is clarity.
Flexibility of skills is required in the workforce, particularly if companies need to branch into other sectors.
Supply chain should look at contingency planning and companies need to have a long term plan but here and now it’s about strengthening the position.
Keep spending and be confident, learn from the previous recession.
One consultant made the point about the differences between privately owned businesses being able to make their own decisions which isn’t the case for a PLC with pressure from their shareholders which is linked to the stock market. Shareholders may want to reform to protect profits. A sensible well planned response is needed. We also don’t want to add to the skills shortage and strategic thinking is definitely required. The consultant also went on to say, deal with facts, don’t panic.
Another consultant went on to say that we need to look for the opportunities. Due to EU rules the government couldn’t invest in the steel industry but they could in the future and in other core industries.
The MD who voted to leave said that Brexit places a greater emphasis for us to explore and build closer relationships with European and global partners outside of the command and control environment and structure to which the current member states subscribe, supply more, sell more. We have a lot to learn and a lot to gain, think business not building and take off the blinkers, build an international capability and exploit our vision.
As for me, I say, whilst you can’t control what is happening whilst we are stuck at the station, you can control what happens in your business. Use this time to think strategically, review your business, look at potential areas where changes could be made to maximise profits without losing people and putting on hold any plans for growth or training. When you panic, it shuts down the area of your brain that thinks creatively. Ironic that when I think of the words, ‘don’t panic’ I think of Dad’s Army!!
Speaking of Dads, when I spoke to him last Friday he said it will work itself out, so I’m sure we’re all going to be fine!
One last word, I also heard today that businesses who are prepared to take advice are twice as likely to succeed as those who don’t so LET’S HELP EACH OTHER.