Brexit: It's the Uncertainty I Can't Stand!

Posted by  The Tig 24-May-2016 09:28:53

the-tig
Our undercover commenter who covers all topics controversial

Brexit-article.jpgBrexit, have you made up your mind yet?

If you haven’t and you have been watching the TV or reading newspapers looking for some guidance, you are probably sick to the back teeth of it already.

Dave says it’s a leap into the dark, Boris says that with one bound we’ll be free from the Brussels bureaucrats. Obama wants us in, Trump wants us out.

The Germans think we’d be mad to do it, the French don’t seem all that bothered and you get the feeling the Danes secretly want a referendum of their own.

 Absolute... apocalypse or confidence?

Listen to our leaders and you variously get warnings of impending apocalypse (crashing house prices, economic implosion, that sort of thing) or absolute confidence that we’ll revert to our traditional status of world traders merrily hawking our wares across the globe.

I’ve spoken to senior people working in multi-nationals who are in favour of Brexit and small shopkeepers, who have never exported anything in their entire lives, who want us desperately to stay in.

I’d look to the opinion polls for answers, but after the last General Election we can’t really trust them.

However, there is one thing I do know. We definitely need to make a decision one way or another because business hates this uncertainty.

Uncertainty creates supply chain inertia

The problem with uncertainty is you can’t see it and it’s difficult to monitor its impact. It just creates inertia. Nothing happens.

Investment decisions are put on hold and plans are left on the shelf. That final decision on the factory extension is ‘parked’. The big order you’ve been expecting is ‘delayed’. The meeting in Dusseldorf to talk about 2017 strategy is ‘postponed’.

And this inertia reverberates down the supply chain. That factory extension I mentioned needs new cranes, conveyor systems and automation equipment. None of that can be ordered until there is a final go-ahead.

What’s more, the supplier of the conveyor system can’t put in their order for bearings, or steel for the rollers, until they have a firm order themselves.

In turn, the bearings distributor decides to run down stock rather than order more, ‘just in case’. The bearings manufacturer, who supplies the distributor, senses the market is weakening and cuts a shift. It goes on and on and on.

Before you know it, the Bank of England is talking cryptically of ‘softening demand’ and the CBI is talking about economic ‘headwinds’.

Onwards and upwards, whatever the outcome

Which is why after the vote in June we need to stick to the decision, whatever it is. No talk of re-runs like after the Scotland referendum, we need to make a decision and accept it.

Business needs nothing less.

What are your thoughts on the forthcoming European referendum? Are you in or out?

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Topics: News, Supply Chain, Flow Control

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