President’s Column: November 2018
Although we had all hoped that October would bring some much-needed clarity to the Brexit process, this has not been the case. Because of this, the structural steelwork sector has asked itself what the risks of a no-deal Brexit are to the UK’s structural steelwork supply.
The answer to this question is that the risk of a no-deal Brexit to the supply of structural steelwork in the UK is low.
So how do we know? BCSA and its member companies undertook a risk analysis that looked at the supply of materials and products, the structure of the workforce, stocking trends and tariffs under WTO rules.
Importantly, 98% of the UK’s structural steelwork is fabricated in the UK, which means a no-deal Brexit poses no risk to structural steelwork manufacturing. The key input to this process is of course steel, and the risk to the availability and delivery of hot rolled structural sections is low. This is largely due to a joined-up supply chain that includes a UK producer, European producers, and a well established network of distributors and stockholders who hold sufficient levels of stock to support just-in-time deliveries to steelwork contractors.
UK steelmakers currently source their raw materials outside the EU and purchase forward due to long shipping times. A no deal would have no effect on this trade and any customs delays could be easily absorbed. And if UK – EU trade moved to WTO rules under a no deal scenario, import duties on raw steel would remain at 0%
There is very little risk to labour availability. On average only 7% of employees working for UK steelwork contractors are from the EU. In contrast to subcontractors that work mainly on-site, structural steelwork is fabricated offsite in manufacturing facilities that have a permanent, stable and full-time workforce.
Plant and equipment are a high-value, long-term purchase with orders for new plant and machinery made many months in advance. Machinery supplies are expected to be unaffected by a no-deal Brexit.
Structural fasteners and bolts used by steelwork contractors in the UK are sourced globally and UK suppliers already have to hold a sufficient stock of product in their UK warehouses. The risk to supply is low.
Currency fluctuations would impact on both input and output pricing, but this is only one of many factors that has an impact on steel pricing models at any one point in time.
The full risk analysis can be found in Latest News on www.steelconstruction.org
BCSA President & Sales Director Cleveland Bridge