The number of supply chain managers looking to localise their respective supply chains because of Brexit has grown, according to the latest survey from the Chartered Institute of Procurement & Supply (CIPS).
Some 63% of EU businesses expect to move their supply chains out of the UK, while 40% of UK businesses are looking to replace their EU suppliers, the survey suggested.
A similar survey from the institute in May showed that 45% of businesses from the continent who responded were looking to replace their UK suppliers while 31% of UK supply chain managers taking part said they were looking to replace their EU suppliers with local ones.
“The Brexit negotiating teams promise that progress will be made soon, but it is already too late for scores of businesses who look like they will be deserted by their European partners. British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together,” said Gerry Walsh, group CEO of the CIPS.
Hopes of a smooth transition into a trade agreement in March 2019 suffered a setback recently when the European Parliament decided that talks over the terms of the divorce had not progressed sufficiently for the next stage of negotiations, covering the two trade partners' future relationship, to begin.
“While the TV cameras are fixed on Brussels, the deals which will determine the future prosperity of Britain and Europe are being struck behind closed doors in businesses large and small. The lack of clarity coming from both sides is already shaping the British economy of the future – and it does not fill businesses with confidence,” said Walsh.
“The success of the negotiations should not be measured on the final deal only, but on how quickly both sides can provide certainty. The clock is ticking.”
The latest CIPS survey was completed by 1,118 supply chain managers between September 4th and October 5th. It included 702 UK businesses with EU suppliers and 106 EU businesses with UK supply chains.
According to the survey, one in five (20%) UK businesses with EU suppliers have found it difficult to secure contracts that run after March 2019; while nearly one in ten (8%) UK businesses said their organisations had already lost contracts as a result of Brexit – with 14% believing part or all of their organisation’s operations will no longer be viable.
Meanwhile, 25% of UK businesses with more than 250 employees have already spent at least £100,000 preparing their supply chain for the split. Only 14% of UK businesses with EU suppliers feel like they are sufficiently prepared for Brexit.