The threat of a “disastrous” no-deal Brexit is forcing businesses to stockpile frozen food for the elderly, robot parts and even horsehair in a move that could lead to higher prices and “significant shortages” for consumers, experts have warned.
Many small businesses can’t afford to stockpile and are being hampered even further by the fact no one can say for certain what terms the UK will have to abide by when leaving the EU.
Policy & Advocacy Chairman Martin McTague from the Federation of Small Businesses told HuffPost UK: “For the few that can stockpile, there’s a lot of frustration.
“They were marched up the hill in March ahead of the original Brexit date only to be told to come back down again.
“And with Black Friday and the Christmas season on the horizon, we could well see warehouse capacity pushed to the brink in the months ahead.”
Here are five businesses being forced to stockpile ahead of the Brexit deadline.
Savoir Beds manufacture of handcrafted beds depends on a regular supply of horse-hair in order to produce their luxury, high-end mattresses that sell for upwards of £5,000.
The hair comes from Argentina and takes five months to reach the UK, including a processing stage in Switzerland and a journey across the channel.
Savoir Beds started stockpiling horsehair last October, in preparation for the first Brexit deadline. In total they have collected £500,000 of stock, double the normal amount.
This figure dipped during the extension, but is being ramped up again for October 31st. Alistair Hughes, the managing director at Savoir Beds, said that they have “rammed our warehouse absolutely full”.
The company exports 55 percent of the beds they make and are keen to develop their international market, but stockpiling for a no-deal Brexit has tied up funds that would otherwise be used to expand the business.
Asked if they will expand their overseas showrooms if there is a no-deal, Hughes said: “We’ll see how things look after 31st October.”
Shadow Robot Company
The Shadow Robot Company designs and manufactures anthropomorphic robot hands, and is one of the longest running robot firms in the UK.
According to the Managing Director Richard Walker, one of their biggest frustrations during the run-up to Brexit is the need for “speculative purchases” – purchases for products in development, which might need new parts at the last minute.
The company currently spends 2-3 percent of their turnover on purchased goods, and twice that (5-10 percent) on “part-finished” or “speculative” goods.
According to Walker, the company was originally relieved at the extension, but that good feeling has quickly diminished as the threat of a no-deal looms.
He also lamented the unnecessary pressure that Brexit has placed on the continental Europeans in his workforce, who were worried that they might not be able to stay in the UK.
To deal with this issue, and to keep connections to the European market, the company has recently opened a branch in Spain.
TheGuardian recently reported that Domino’s pizza has been stockpiling seven million pounds worth of topping ingredients in preparation for a no-deal Brexit.
Portuguese tomato sauce, frozen chicken, tuna, and pineapple are some of the toppings being stored.
Ted Woodward from the Food and Drink Federation, said: “We believe [a no-deal Brexit] would be disastrous for the UK’s food and drink industry and inflict serious damage on UK food and drink.
“We expect prices will rise, there will be significant shortages of some products, and disruption for shoppers and consumers will be far reaching.”
HuffPost contacted the Food and Drink Federation to get an idea of the stockpiling situation for products with a short shelf life.The FDF is the voice of the food and drink industry, speaking on behalf of global brands and small businesses.
They provided two case studies from among their members, who asked not to be identified in order to protect their business interests from competitors.
Food and Drink Company 1 - anonymous
A company specialising in meals for older people spent in the region of £5m stockpiling 12,000 pallets to store their frozen and chilled food for the original March deadline.
In the event of another no-deal Brexit, they would need to repeat this, but all the warehouse and storage capacity has already been booked two years ago as the run up to Christmas is the busiest time of year for food and drink.
Chief Executive of the London Chamber of Commerce and Industry Peter Bishop, told HuffPost UK: ”Some members remain dubious about whether the UK’s exit from the EU will actually happen at the end of October.”
Food and Drink Company 2 - anonymous
One producer, which makes the ingredients used in meals for vulnerable people, experienced a record January, February and March of this year – orders were 20 percent ahead of their average, all driven by stockpiling.
By April they had to resort to sweeping the factory floor to pass the time – business had simply dried up.
At that point they began debating whether to close the factory for a short spell.
Compounding the issue, goods they had stockpiled were bought in at higher than regular prices and will now need to be sold at cost price or a loss, hitting their profits further.
The timing and uncertainty around the Brexit deadline causes a further headache as the business builds production through October, November and December so they can close the factory at Christmas yet deliver the same output.
While they wouldn’t provide any specific details, the FDF did supply information on the types of ingredients that will be hit in the event of a no-deal:
“Many UK producers risk facing a potentially devastating loss of access to essential ingredients that are not available or produced in sufficient volumes in the UK.
For example, the UK doesn’t produce sufficient volumes of high protein wheat to meet the needs of the UK’s bread bakers. The continued availability of bread on shelves depends on timely arrivals of just-in-time imports from Germany and France.
We also do not have sufficient processing capacity to supply milk powders for use in manufacturing of products such as infant formula, chocolate and confectionery.”
Back in the world of politics, Downing Street reiterated on Monday that Boris Johnson remains “very clear in his determination to want to get a deal” and said he will hold talks with EU leaders over the phone in the coming days.
The statement came as it was reported the PM’s plans could be blown off course early next month after a judge agreed to fast-track a hearing on whether he can legally suspend Parliament to force through a no-deal exit.