We spoke with our Man in the UK, recently for an update on Brexit. That would be Edward “Ted” Hadingham, president of PSR’s European operations. A UK native, Ted has been running PSR operations in the European area since 1989.
Here’s what he had to say.
Trade negotiators in the UK better sharpen their pencils because it looks as though they’ll be taking notes and making offers for many years before any deals are completed.
Ted HadinghamAssuming that the UK pulls the trigger on Article 50 and officially tells the European Union that it wants to cut their relationship, the two parties have two years to complete the talks. That brings us to 2018.
(Britain’s new prime minister, Theresa May has been quoted as saying (July 20, 2016) the UK isn’t going to start negotiations with the EU until its objectives “are clear,” and that won’t be this year.
Negotiations aren’t likely to be completed quickly. Trade talks between the U.S. and the EU began in 2013, and there’s no end in sight.)
While there’s been talk that the EU can extend the two-year deadline, it’s a little known fact that all 27 members of the EU have to agree to this step. Taking any bets on this action, anyone?
At the end of 2018, the UK is no longer in the EU. If there’s no agreement, tough. That’s why the new UK government is trying to get separate agreements before they invoke Article 50. They’re trying to get down that path as far as they can. But however quickly it moves, it won’t happen overnight.
The UK is in a difficult position—it’s still a voting member of EU, but nobody is going to listen to them.
Meanwhile, the power manufacturing industry is likely to deteriorate in the UK as foreign manufacturers review facility expansions in the UK and elsewhere.
In the long term—five to 10 years out–some international companies will invest in other countries rather than in the UK; they’ll move some of their future manufacturing capacity into the EU. Most are in the UK because they want to be in the EU. If the UK is not in the EU, what are they going to do?
There are a number of non-UK headquartered powered equipment manufacturers who have production in the UK and also elsewhere in the World. It would not take much for them to move that production out of the UK in the longer term.
Companies will take a wait-and-see attitude, and they’ll hold off investments in the UK. If they’re going to make an investment, it probably will be in other (geographic) areas. It’ll be serious for the UK, but in the world view, it won’t have an impact. It’s just that powered equipment might not be coming from the same places.
The UK move from the EU won’t affect the engine and engine-powered equipment business because the machines will continue to be produced somewhere in the same volumes. PSR
