We have all spent the last 3 years waking up to more talk about Brexit in the news, but now that it is actually here what does it mean in reality and is that what we expected?
Whether you personally were a ‘remainer’ or a ‘leave’ voter in the referendum, is now largely irrelevant. We are now beyond looking back and must look forward to embrace what opportunities we can, following the finalisation of Brexit. It is too early to know whether Brexit will ultimately benefit the UK economy or not. Of course the final Brexit date falling within a third lockdown due to the pandemic will further skew the results. However let’s look at the potential impact on the construction industry, which is where National Drilling Services predominantly works.
Supply to the Construction Industry
As with many other industries across the nation, there is equipment and parts that are used in the construction processes or for machinery that are either manufactured or distributed from within the European Union (EU). Unsurprisingly these parts and products have in some cases been delayed since Brexit came into force. More rigorous checking at customs borders at ports has created some hold ups in supply as well as the increased amount of paperwork required. Export and import licences as well as declaration forms and altered customs arrangements are just the tip of the iceberg, but how has this affected National Drilling Services in particular?
Supply from the EU to National Drilling Services
The strong reputation in the UK construction industry for National Drilling Services is built upon providing a reliable and top quality service to the construction companies and contractors for whom we work. That means our operators respect the site regulations and work closely with the site manager to ensure work is carried out efficiently and safely. Our team also ensure that we access the construction site at a time to suit the building/demolition schedule, even if that requires our team to be working at night. It also means we arrive on site with all the appropriate equipment, machinery and parts to facilitate the drilling, sawing or demolition task which we are required to perform.
Brexit causes a delay in supply
It is this last point where we have seen the impact of the restriction of the flow of goods as a result of the implementation of Brexit. Many drilling and cutting consumables either come from or have to pass through the EU countries before they arrive in the UK. This is putting pressure on our stock levels of parts such as diamond blades for example. Without these diamond blades we may be held back in providing our usual fast, efficient and accurate cutting and drilling services. The prompt supply of blades and drill parts are obviously fundamental to us providing our main services, so any issues with supply of these parts impacts heavily on our operation. Generally we have reasonable stock levels of most of the blades etc that we use, but delays in restocking is causing us concerns in being able to meet schedules and maintain our efficient service.
Supply issues due to Brexit or other reasons?
It is difficult to know for sure how much of these supply concerns are directly due to the impact of increased border restrictions, complex paperwork and import/export licence requirements due to Brexit, or if it is partly due to the Covid 19 pandemic. Manufacturing and distribution centres worldwide have been forced to either close temporarily (certainly during the first lockdown) or rethink how they work in order to maintain social distancing and keep assembly workers, packers as well as office workers safe. All this comes at a cost which means there is another knock on affect to National Drilling Services.
Price increases – a knock on effect
Although inflation is still relatively low in the UK at under 1%, it has risen repeatedly in the last 6 months. As you can see in the chart published by the Office for National Statistics. The Consumer Price Index is still well under the Bank of England target rate of 2%, but in real terms as a business, the management at National Drilling Services is noticing significant price increases in drilling and cutting parts across the board. There is only so much additional cost we can absorb before we are forced to increase our rates as well. Many business which have been forced to close temporarily during lockdown have taken the opportunity on reopening their doors to increase their prices. As our services have barely stopped apart from at the beginning of the first lockdown and we have so far maintained our prices at the same level as they were this time last year. However we will have to consider a price increase soon if our costs continue this trend upwards.
Time is money
It may sound like an old cliché but time really is money and on top of the cost increases we have been subjected to, we also have the time cost of sorting out the complex paperwork. We mentioned in passing that there are all kinds of forms which need to be completed and that is once we have established that the business we purchase from has a licence to export to the UK. All these administrative issues have taken considerable time out of our working day when we might otherwise have been focusing on our operations on the ground and talking to our customers.
On a brighter note, we can confirm that all these arrangements are in place and whilst there have been a few teething troubles with supply, we are confident that these will all iron out. So the good news for our customers is that we will continue to be able to provide the drilling, cutting and demolition services as you would expect from a UK leading supplier. We look forward to serving the UK construction industry going forwards and continuing to build our relationships with our colleagues in construction.
To discuss your drilling, sawing or demolition requirements you can contact us. Alternatively just pick the phone and call us on 0161 443 2822.