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  HOME | Business & Economy (Click here for more)

Secret Truck Routes and Backup Storage: One Company’s Brexit Crisis Plan

REDDITCH, England – Matthias Meyer’s emergency Brexit plan – from a secret truck route to extra storage space and pre-booked ferry transportation – has been ready for months.

But for the UK head of German machine-tool maker Heller Maschinenfabrik GmbH, the tricky question is when, or even if, he should trigger a plan that rests on many political unknowns.

“It feels a bit like being in a casino,” said Meyer, from his office in this redbrick working-class town near Birmingham. The manager said he felt “constantly torn” between the varying predictions about what might – or might not – happen on March 29, the deadline for Britain to exit from the European Union.

Should the UK crash out of the EU without a deal – as the stranded negotiations between the two suggest – the plan could save his UK plant. But if Prime Minister Theresa May clinches a last-minute agreement for an orderly exit, or if Britain stays within the bloc after all, the extra cost could be wasted.

The quandary is a familiar one across a region where many businesses have grown decades-old ties with customers and suppliers across the world’s largest customs-free market. Less than two months from the fateful date, no one – not the squabbling members of the British parliament, not May’s embattled government, and not the EU negotiators in Brussels – can predict the outcome.

Executives have grown louder in voicing their frustration. Airbus SE Chief Executive Tom Enders last week called the lack of progress after two years of talks a “disgrace” for businesses, warning that if the UK left without a deal it would threaten the company’s future there.

Meyer, 49 years old, has set a personal deadline for mid-February. If by then the UK has yet to agree on an orderly exit deal, he will set his plan in motion, hiring two people to cope with customs, bringing over as many parts as possible from Heller’s German headquarters and renting out extra space to set up an emergency components stock.

He will use a secret alternative route to transport parts to avoid congestion around the busy port of Dover for at least a month – a detour that will cost an extra GBP1,000 ($1,300) a truck – 40 percent to 50 percent above current transport costs.

Like thousands of other companies in the UK, Heller depends on a closely timed cross-border supply chain. Heller UK gets some 60 percent of its components from other European countries, delivered in six to seven truckloads a week to save storage costs. Most of the assembled machines – 1.6-ton white boxes that can be programmed to make just about anything from cylinder heads to break systems – are shipped back to Germany, where they are dispatched around the globe. Privately held Heller had revenue of 578 million euros ($664 million) in 2017.

Meyer’s five-strong Brexit team has spent the past year drafting the plan. He has held staff meetings every two months to reassure his 170 employees and hired external advisers. Total cost of the planning so far: somewhere between 100,000 and 200,000 pounds.

That will soar if Heller moves ahead with his plan. On top of the extra transport costs, he is budgeting 100,000 to 150,000 pounds a year for the additional staff.

“On average, I’ve probably spent 20 percent to 30 percent of my time on Brexit planning over the past year and a half,” said Meyer, walking through the pristine aisles where Heller uses other German-made machines to build its equipment.

On a recent Friday, Meyer huddled with colleagues over calculators and commercial property listings to decide how much external storage space the company may need – a guessing game given the unknown variables of Brexit.

Meyer wasn’t quite ready to start stockpiling parts now to avoid committing the thousands of pounds he might be able to save if Britain doesn’t stumble out the EU on March 29 after all. After some discussion, Meyer opted for some additional warehouse space, asking his team to secure an option for more.

“If someone would just make a decision, good or bad I don’t really care, then I know what I’m dealing with,” said logistics manager Eddie Rouse, referring to the stalled Brexit talks.

For operations manager David Evans, “the biggest question on people’s lips is: If Brexit goes the wrong way, will Heller UK close?”

Leaving wouldn’t be easy. Over 40 years, Heller has trained a highly skilled and specialized workforce in what is now the company’s largest production site outside Germany. That all would be hard to rebuild from scratch elsewhere, Meyer said.

Rouse, for example, began his career at Heller more than two decades ago as a 17-year-old apprentice. Evans has been at the site for 31 years.

Evans learned to speak German with a Swabian accent from talking with German colleagues and visiting Heller’s base near Stuttgart. At the UK site, German jargon has crept into the British workers’ technical patois – from “Takt” for cycle to “Einheit” for unit. In an employee kitchen, a bottle of German mulled wine lingers – a leftover from this year’s Christmas gift basket for staff.

Meyer said the company must keep all options open. While Heller has invested roughly 2 million pounds since the Brexit referendum of 2016, it recently postponed its decision on a 3-million pound investment pending more clarity.

“If it really comes to a no-deal Brexit, we will have to rethink,” he said.

One emergency plan Meyer still refuses to create concerns his own career. Although he is married to a British woman and has mainly lived in the UK since 2003, he hasn’t applied for a British passport.

“This crash culture, somehow I just can’t imagine it, it’s just not British,” said Meyer.

 

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