Companies in Britain prepare for disorderly Brexit as talks stall

Britain and the EU are working to get Brexit talks back on track this week, amid increasing protests against the country's exit from the European bloc. (Reuters)
Updated 07 December 2017
0

Companies in Britain prepare for disorderly Brexit as talks stall

LONDON: Big companies are stepping up their plans in case Britain crashes out of the EU without a deal as Prime Minister Theresa May struggles to get talks back on track after a major setback.
Britain is aiming to agree with the EU on December 14 to move the Brexit talks on to the second phase. This would focus on trade and a two-year transition deal to smooth the departure after March 2019. But the timetable has been thrown into doubt after discussions broke down in Brussels on Monday.
Senior executives in the financial services sector, which accounts for about 12 percent of the economy, said May’s efforts to secure a transition deal had come too late and they had no choice but to start restructuring.
Big supermarkets such as Tesco and Sainsbury’s have been working with suppliers to identify potential delays, shortages or price rises. They have lined up alternative providers, according to suppliers and sources in the industry.
The uncertainty is particularly painful for the manufacturing sector as low margins make it risky for them to restructure unless it is essential. They have been holding off on investment but are preparing for new certification that would allow them to sell in Europe if there is no deal.
“The delay is so great and the uncertainty is so great that companies have no choice but to start triggering their plans,” the head of one of Britain’s largest companies said.
Britain and the EU are working to get talks back on track this week but the chairman of one large international bank said its executives had decided to plan for the worst at a conference call on Tuesday.
“The question is no longer whether we are moving (operations to the EU), it is a question of how big those moves are?,” he said.
Like other executives, he had been asked by his board and the government not to divulge their thinking.
The chairman said the bank has started discussions with customers about rerouting client activity to European hubs, including rewriting thousands of contracts.
Senior employees were told last month if they had to relocate to Europe, he said.
Another senior executive at a large US bank said that he was increasingly concerned that May’s government could collapse after the Brussels talks broke down over a dispute about the Irish border, adding to the uncertainty.
“We are at the maximum point of danger,” he said.
The financial sector needs extra time to make sure its clients are prepared. For instance, a British bank opening a subsidiary in Europe may need its clients to adopt a new sort code throughout their own supply chains.
In other sectors, companies are making smaller changes that would enable them to operate in Europe after Brexit, from preparing compliance changes to drawing up shadow supply chains and looking for additional warehouse space.
Food retailers are lining up alternative suppliers in Britain or outside the EU in case delays at borders or new tariffs disrupt deliveries. Around 30 percent of Britain’s food and drink comes from the EU.
Some changes would need to be made early next year in time for the 2019 departure. Changing a fresh fruit supplier could require a lead time of a year, depending on the growing cycle.
Ali Capper, a partner in Stocks Farm in Worcestershire, central England, and a chair of the Horticulture and Potatoes Board at the National Farmers Union, said there were signs retail customers were requesting more British produce.
Ireland provides almost 70 percent of UK beef imports, or 270,000 tons a year. Were tariffs or border delays to make Irish beef less competitive, supermarkets could look further afield, for instance to Argentina.
Many manufacturers are unwilling to sign off on new plans until they know how Britain will trade in the future.
The drugs sector has been among the first to move so they can comply with EU regulations. GSK and AstraZeneca have already set up new facilities in mainland Europe to test batches of drugs made in Britain.
Autos and aerospace firms are focusing on certification. According to the aerospace and defense trade body, ADS, some companies are considering applying to the European Aviation Safety Agency for a status that would enable them to sell in the EU if Britain was no longer a member state.
Japanese carmaker Honda, which builds around 8 percent of British cars at its plant in Swindon, is considering increasing its warehouse capacity in Britain and stock levels to counter any new border delays.
Manufacturers reluctance to sign off on big plans has had a knock-on effect on companies in the supply chain.
“The biggest impact we see is a general unwillingness to make investment and capacity decisions as result of the continued uncertainty,” said Stephen Cheetham, owner of PK Engineering of Hereford, a supplier of components to the aerospace and scientific industries.
“We would expect continued paralysis and short-termism until a trade deal is finalized,” he said.
Having a transition deal will allow businesses to survive the two years after Brexit by allowing them to defer any big decisions until the final parameters of Brexit are worked out, said Andrew Bonfield, finance director of National Grid and chairman of the 100 Group of finance chiefs.
“It’s about the avoidance of a cliff edge,” he said.


50 years after Concorde, US start-up eyes supersonic future

Boom Supersonic co-founder, Blake Scholl, poses for a photograph in front of an artists impression of his company's proposed design for an supersonic aircraft, dubbed Baby Boom, at the Farnborough Airshow, south west of London, on July 18, 2018. (AFP)
Updated 22 July 2018
0

50 years after Concorde, US start-up eyes supersonic future

  • Boom Supersonic’s aircraft is expected by the company to fly for the first time next year
  • The Concorde was retired following an accident in 2000 in which a Concorde crashed shortly after takeoff from Paris, killing 113 people

WEYBRIDGE, United Kingdom: Luxury air travel faster than the speed of sound: A US start-up is aiming to revive commercial supersonic flight 50 years after the ill-fated Concorde first took to the skies.
Blake Scholl, the former Amazon staffer who co-founded Boom Supersonic, delivered the pledge this week in front of a fully-restored Concorde jet at the Brooklands aviation and motor museum in Weybridge, southwest of London.
Boom Supersonic’s backers include Richard Branson and Japan Airlines and other players are eyeing the same segment.
The company aims to manufacture a prototype jet next year but its plans have been met with skepticism in some quarters.
“The story of Concorde is the story of a journey started but not completed — and we want to pick up on it,” Scholl said.
The event coincided with the nearby Farnborough Airshow.
“Today... the world is more linked than it’s ever been before and the need for improved human connection has never been greater,” Scholl said.
“At Boom, we are inspired at what was accomplished half a century ago,” he added, speaking in front of a former British Airways Concorde that flew for the first time in 1969.

Boom Supersonic’s aircraft, dubbed Baby Boom, is expected by the company to fly for the first time next year.
“If we can’t continue where you left off, and build on that, then the shame is on us,” Scholl said, addressing himself to an audience that included retired Concorde staff.
“Our vision is to build a faster airplane that is accessible to more and more people, to anybody who flies.”
Boom Supersonic is making its debut at Farnborough and hopes to produce its new-generation jets in the mid-2020s or later, with the aim of slashing journey times by half.
The proposed aircraft has a maximum flying range of 8,334 kilometers (5,167 miles) at a speed of Mach 2.2 or 2,335 kilometers per hour.
If it takes off, it would be the first supersonic passenger aircraft since Concorde took its final flight in 2003.
The Concorde was retired following an accident in 2000 in which a Concorde crashed shortly after takeoff from Paris, killing 113 people.
Some analysts remain skeptical over the push back into supersonic.
“Supersonic is not what passengers or airlines want right now,” said Strategic Aero analyst Saj Ahmed, stressing that many travelers wanted cheap low-cost carriers instead.
Ahmed said supersonic jets were “very unattractive” because of high start-up development costs, considerations about noise pollution and high prices as well as limited capacity.

Independent air transport consultant John Strickland also noted supersonic travel was unproven commercially.
“Business traffic, on the face of it, is the most lucrative for airlines,” Strickland told AFP.
“But if there is an economic downturn or something happens where the market for business class traffic drains away, then you have nothing else left to do with that aircraft.
“I think it’s going to be some time before we see whether it can establish a large viable market... in the way that Concorde never managed to do.”
These concerns have not stopped interest from other players.
US aerospace giant Boeing had last month unveiled its “hypersonic” airliner concept, which it hopes will fly at Mach 5 — or five times the speed of sound — when it arrives on the scene in 20 to 30 years.
And in April, NASA inked a deal for US giant Lockheed Martin to develop a supersonic “X-plane.”