Industry Reacts to Referendum Result
28th June 2016
As the fallout from Thursday's referendum result continues to cause controversy, leading figures from the engineering and manufacturing industries have reacted to the situation the UK, and Europe, finds itself in.
On Thursday 24th June, the British public voted in a 52% majority to leave the European Union. The UK will now begin the process of separating itself from the 28-country economic and political union that allows the free movement of goods and people between member states. This is the first time a member state has voted to leave the EU and there are many aspects to the withdrawal that need to be negotiated within the next two years.
The Institution of Engineering and Technology (IET) is calling for an urgent discussion to mitigate the impacts on the engineering sector - which is vital to the UK's economy.
Naomi Climer, IET president, said: "At a time when we have a huge shortage of engineers, limiting the number of professional engineers that could come and contribute to our economy would affect the industry and the nation's financial wellbeing."
Other issues identified by the IET include changes to access to global markets and companies, a decline in funding for engineering and science research, and a weakening of the UK's influence on global engineering standards.
The Royal Academy of Engineering said that EU support, both financial and non-financial, has contributed to the UK being a globally excellent and highly productive research and innovation base. Therefore, it will continue to work with partners both within and outside of the EU to make the UK a leading nation for engineering innovation.
Dame Ann Dowling, president of the Royal Academy of Engineering, said: "Engineering contributes at least 20% of the UK's gross value added and accounts for half our exports. It is vital that the economy is carefully managed in the wake of the Brexit vote in order to maintain our world-leading position in innovation and industrial development."
Researchers at Durham University Business School say that a closely integrated supply chain, where there is an easy exchange of ideas and information, is likely to perform better. Supply chains know this and over the years there have been several efforts to bring manufacturers closer together.
Dr Christos Tsinopoulos, senior lecturer in Operations & Project Management at Durham University Business School, commented: "The key point here is that to make this happen there needs to be a degree of standardisation in legislation, systems, policies, and even engineering methods.
"Over the last few years this has largely been facilitated by several European bodies. Many have been guided by the EU whereas others have been industry led. The result has been some highly integrated and efficient supply chains which have benefited many of us."
The good news here, Dr Tsinopoulos said, is that given the high degree of integration of many of these supply chains they are relatively difficult to change in the short term. However, the bad news is that in the medium and longer term there would be a higher incentive to do so.
"In a competitive environment where small changes can have significant impact on performance and relationships, switching between supply chains and countries may become an increasingly popular choice" concluded Dr Tsinopoulos.
Robert Bosch's CEO, Dr Volkmar Denner, added a view from outside the UK: "The EU is a successful project. We are disappointed by the decision to take the UK out of the world's largest single market, not only for economic reasons. The long-term economic consequences will only become apparent gradually."
The UK is Bosch's second largest European market after Germany, with sales of £2.7million made in 2015.
In total, Bosch employs some 5,300 associates at 40 locations (including seven manufacturing locations) in the UK. All four business sectors - Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology - have operations here.
Dr Denner said Bosch is currently examining the effects of leaving the EU on its business. In addition, it has already put precautionary measures in place. For example, the company has significantly raised its hedging ratios in order to counteract a possible depreciation of the pound.
However, Dr Denner added: "We currently do not have any plans to scale back our capital expenditure in the UK. As we are traditionally well represented in many European markets, we will likely be less affected than companies that use the UK as a base into Europe."
GE, based in the US, provided a perspective from outside the EU: "Although GE supported the UK remaining in the EU, we respect the decision of the British people and remain firmly committed to the UK and Europe. GE has 22,000 employees in the UK and 100,000 employees in Europe overall, who will continue to focus on delivering great outcomes for our customers," GE chairman and CEO Jeffrey Immelt said."We believe in the potential to build a competitive Europe and UK through digital transformation and manufacturing."
Source: Eureka Magazine
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