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Brexit & the Impact on the Manufacturing Sector

by MAX JONES / Monday, 11th July 2016


Words have such a powerful meaning don’t they? No words have more of an emotional meaning attached to them than those like money, politics, religion, & so on, wouldn’t you agree? But what about Brexit…

What meaning do you associate to the word Brexit & the events of the last week or so?

In the wake of the UK’s Brexit (exit of the EU for those who may have been living in rock for the past year or so!), the pound fell to a 31-year low of £1.31 on Monday June 27 - the lowest level since Manchester United beat Everton 1-0 in the FA Cup Final (1985!). Surely that would have a negative impact on the recruitment market & especially the manufacturing sector. After all if the pound falls, import costs go up, & if import costs go up, inflation goes up, & if inflation goes up, the cost of day-to-day commodities goes up which causes a fall in people’s real income (!)

But is it as bad as that? Heck yes Max, I hear you scream at your computer screen! Brexit is awful for anyone out there who places overseas contractors. Those high value, low volume recruitment agencies in markets such as Head-hunting, Interim management, supply chain, procurement – they’ll all feel the negative impact of Brexit & unfortunately there’s no getting away from that. But what about some of the other markets in the world of recruitment…

In a recent interview with the Managing Director of Linear Resourcing, Mike Gorshkov, it was argued that post-Brexit actually had a positive effect on the manufacturing sector. This is because with a weaker pound & lower corporation tax (which is fantastic for you Business owners out there!), the appeal of exports becomes a lot more attractive to the global market. A more attractive global manufacturing market, with the UK right in the thick of it, encourages domestic manufacturing companies to grow & expand. & what does a growing and expanding manufacturing company need…you’ve guessed it, an agency that understands the market, the current climate & has a solution to the client’s growth plans.

Forgive me if I’m coming across a little glib here, I don’t mean to be, but heck we have to see it how it is, not worse than it is. Perhaps there are more silver linings in what is a relatively dark & sinister cloud, than we first thought? There sure are when it comes to the manufacturing market (!)

For example, what has been rather interesting to see in the wake of Brexit is that many leading experts are suggesting that Brexit, in real terms, won’t impact the market as much as other instabilities in the sector at the moment. There is wide spread acceptance that the weakening value of the pound will have some positive effects on international business, but of course this would mean our import levels may have to fall or get more expensive. However Brexit should NOT be a major concern to the manufacturing industry & instead shouldn’t we be more concerned about the increasing rise of projects across the UK in full knowledge that our resources are diminishing?

So while Brexit has some impact on the manufacturing sector, in actual fact due to the value of the pound & what this ultimately means for international business, it may not be as bad as first thought. But what has become evident is there are other areas of concern in the sector that should not be neglected simply because of Brexit. So much so that figures such as David Leyshon have suggested that ultimately the continued scarcity in technical skills against the continuing increase of long-term projects should cause far greater concern to those in the sector, than Brexit. After all guys you know the old saying - “Candidate is King” & it may sound overused but it’s true. Even with the UK leaving the EU, candidates remain as important, if not more important, than ever before. It would be interesting to hear your thoughts on the developments over the last week or so, how are you finding life after the EU? Is it positively impacting your recruitment process or having a detrimental effect to both your balance book & your business esteem? I hope it’s the former, but I would be interested to hear from you.