Episode 9: Brexit – Brexit: How does it affect (our) business?

Julia Ures: “So, hello and I would like to welcome you to our new episode of In Sight KTR. Today we will learn more about the Brexit and how it has changed and affected KTR and their business and i’m delighted to welcome two British KTR colleagues who will be sharing their experiences with us first hand. My first guest is Geoff Ancliff, Managing Director at KTR U.K. Ltd.. So, Geoff, you have been in the company for 22 years, so you were basically there from the beginning at KTR U.K., is that right?”

Geoff Ancliff: “Yeah, I started KTR U.K. in 1999.”

Julia Ures: “Okay, so thanks for taking the time, Geoff, and you’ve brought another colleague, Rod Sarich, Business Development Manager Distribution at KTR U.K.. So. Rod, when did you join Geoff at KTR U.K.?”

Rod Sarich: “Oh, this was about 10 years ago now, so 2010 it was. Yeah, time flies when you’re having fun but uh yeah I started quite a few years ago and I’ve just sort of been working here with Geoff for quite a while. it’s been good.”

Julia Ures: “So nice to have you here and it’s great to have you both here today, since the Brexit is a topic that affects you the most and of course you are the experts for this matter. When I thought about this topic I realized that the referendum for the Brexit already happened in 2016, so five years ago. Geoff, did you think that it would take this long time until the Brexit really took place?”

Geoff Ancliff: “To be quite honest, I didn’t think Brexit would take place at all. The referendum was very, very surprising, but for it to drag as it did – I didn’t expect it to be five years. I did though expect the decision for an amicable divorce to happen at the 11th hour and that something wouldn’t be decided too soon. Politicians always take the time.”

Julia Ures: “Rod, I hear you were mostly responsible for getting KTR U.K. ready for the Brexit. We can all imagine that aspects like customs were really important for you to deal with. What were the things you had to consider in preparation?”

Rod Sarich: “Oh well, it was uh it was a learning experience to say the least and it was it was a difficult challenge in the sense that the conditions were always changing as things progressed. You know, there were certain deadlines, so you tried to meet those deadlines that the government set, then they were pushed back and things were changed and new information became available, but it was mostly sort of the practical side of the sales process or processes: What sort of customs paperwork we thought we might encounter post Brexit, what would happen to our delivery times and our delivery processes. But again, it was largely guess work from us and from our sort of our shipping partners and suppliers, etc. So everyone was sort of nervously trying to predict the future. It was very difficult until Brexit actually occurred and then we had some concrete sort of information to work off of.”

Julia Ures: “What would you say, were there things that caught you off guard that came up during the five years?”

Geoff Ancliff: “I think there was lots of things that caught us off guard. I think the biggest problem was, for us here, was no one knew what was going to happen, no one knew what the outcome was going to be. As Rod said the process was a learning curve, but it wasn’t just a learning curve for us as a business, I think it was also a learning curve for the people within the Government. As we were trying to understand more what the paperwork side and the processes were, we were asking the advisors or the government representatives and they really found it difficult as well, certain aspects where we we had to get um authority and um some of the systems in place, they couldn’t tell us how to fill in the paperwork. I’m right, aren’t I, Rod?”

Rod Sarich: “Yeah.”

Geoff Ancliff: “I’m thinking about duty deferment for a start.”

Rod Sarich: “Yeah, there were just so many sort of administrative questions throughout the whole process, where in in some cases I think government departments were maybe a bit overwhelmed and you know struggling to get answers back quickly enough and in other cases I think they just didn’t know themselves. So yeah, it was uh it was certainly a challenge. And then, of course we knew… there was…after the vote came through and the Article 50 was initiated, and we were sort of pointing towards exit, we just – the best we could do is work off a worst-case scenario. So that’s what we did, we planned sort of for worst case, i.e a hard Brexit with world trade conditions and uh and sort of just went from there and knowing that hopefully if there was a deal we’d end up somewhere a little bit in between, which we have. But yeah, so we do we just sort of planned a worst-case scenario and then waited to see.”

Julia Ures: “Geoff, what is the biggest difference in your daily work, now that the Brexit has happened. Did working together with the German Headquarter or with other subsidiaries maybe change?”

Geoff Ancliff: “I think the way in which we deal with the headquarters is basically the same as what we’ve been dealing with for the last 20 odd years. Our biggest problem, and Rod may correct me wrong, because he’s in the the day-to-day running of the of Brexit, our problem is the delivery situation with our um couriers, because we don’t hold any stock in the U.K. Everything is delivered direct from the head office in Rheine, so we rely on our carrier service and transportation very, very heavily. So, instead of taking two to three days to be delivered from Rheine, we’re now looking at an average of 10 to 14 days I would say, Rod?”

Rod Sarich: “Um yeah, initially. That’s improved a bit, it’s now – so that we’re now more around seven to ten somewhere in that area, but yeah…”

Geoff Ancliff: “So that causes a big issue, because the the the service that we had pre-Brexit was excellent, uh post-Brexit everyone’s trying to understand what the extra tariffs are, well there’s no tariffs, but what the extra paperwork systems are, the customs clearance, once they get to the port there’s clearance there. If the paperwork is not 100 percent correct then obviously that gets sent back, it gets rejected. So the biggest problem we’ve got is knowing exactly where product is to our customers and when our customers ring up and say ‘Where is it?’, it takes us a bit longer to locate the product in its system.”

Julia Ures: “So I want to ask you, Rod, um for you what are the advantages and disadvantages in business in this new situation?”

Rod Sarich: “Well advantages it’s it’s hard to say. I mean, most of the… most of the things we’ve seen have been sort of uh increasing in over overall costs and and delivery times, so it’s largely been more challenges than opportunities, but I will say that on the opportunity side we have learned a lot more about our business I think and about the processes, so like Goeff was alluding to, the fact that we are trying to track down where an order is in the process or a delivery is in the process uh you know it has been a lot of learning for us. I think we know our own system a bit more and understand the whole customs and things which is an advantage to us in some ways and in the long run, of course, that is what we’re operating with, now that’s the system we’re in now. So I think it’s been an opportunity to learn more about the business, but the challenges definitely have been um – especially in the early days of Brexit early in the year this year trying to get the products to the customer and of course with uh you can’t talk about deliveries and that sort of thing without talking about the pandemic and everything else so that’s really added to the to this challenge of getting things to the customers this year. It would have been difficult enough with just Brexit, but it’s been quite a challenge, yeah.”

Julia Ures: “ As you know, our listeners and our viewers, we try to answer as many questions as possible in up to 20 minutes and I would like to thank you for all your exciting questions that you have sent us via email to socialmedia@ktr.com. Please continue to do so and please follow us on Linkedin, Facebook or Instagram, so you don’t miss out on the news on our podcast In Sight KTR. And the next question we received is for you, Geoff: Do the customers have to fear longer delivery time or is it more complicated for them to order products now?”

Geoff Ancliff: “Can you just repeat the question again?”

Julia Ures: “The question is: Do the customers have to fear longer delivery times or is it more complicated for them to order products now?”

Geoff Ancliff: “No, I think the delivery time is the big problem, as I alluded to earlier, with the couriers and everything. I think the customers all do understand the fact that deliveries are going to take longer, so they are looking at ordering and giving us plenty of time. So as I said earlier, you know, we would normally say two to three days. We’ve always been known as a fast reaction organization getting the products out there. We’ve got the issues with the customs clearance and, as Rob said, with the pandemic, so that’s causing issues. Customers are learning to give more time and if you are building machines, you’ve always got to forecast so you can actually do that. So it’s a different way of working these days, you know. We’re having, just as an aside, we don’t meet face to face very often, a) because of COVID, and you know b) because of where the business is going, so we are educating customers to order, to look at their production rather than just wait until the last minute that sometimes customers used to do.”

Julia Ures: “Do you have the possibility to store more products to ensure deliveries?”

Geoff Ancliff: “In Germany, yeah. There’s a finite amount of stock that you can keep in Germany. With the full range of products that we do, what do you actually stock? we have the SK10, the fast moving stuff, we have the SK30s, which are partly finished, we try to sell as many SK10 standard parts as we can. We try to change customers onto standard parts. So we are trying to stock more in Germany, but we’ve also got the added problem of material shortages as well. You know, the economy downed globally last year, we had a massive downturn. This year, so far, we’ve had a massive upturn, you know, and you can’t always ramp up steel production within a couple of weeks. It takes time to build the stock. So I think Germany’s coping admirably in the stocks, they don’t let us down very often. We can always try and move things around. As I said, pandemic is causing us causing the problem, not Brexit.”

Rod Sarich: “Yeah, I was just going to add there, Geoff, that what we did pre-Brexit. We did advise all our customers, as many suppliers did, to try and get as much stock as they could into the country before Christmas and before the New Year sort of deadlines. So I think some customers did take good advantage of that and they did bring some stock in, but of course when you’re talking about uh breakdown and maintenance inquiries, it’s … that stuff you can’t plan for so much, so that’s where it’s been a struggle to get products uh for the breakdown sort of situations.”

Geoff Ancliff: “I think…Can I just add as well? I think the pandemic has changed the way in which the customers are working. A lot of the engineers now are spending time at home, they’ve been moved out of the office because of the pandemic, which gives them more time to look at projects that are coming up. They’re not being pulled from pillar to post inside the office on a normal working day, so they can look at bigger projects which gives us time to look at

bigger projects and larger uh products that we manufacture, which also gives Germany time to look at their production schedules as well, so it’s – we get that pandemic has given us some headaches but it’s also giving us some opportunities as well. But as I said earlier, you know, Germany have done admirably in the way in which they’ve organized. We’ve – as Rod said, we’ve tried to organize our customers to look at Brexit, some did, some didn’t.”

Julia Ures: “Rod, the next question and the last question I have is for you: The Brexit has been five years in the making, now we are five months in. Is the process already over or what is your estimation how long is it going to take until everything is settled?”

Rod Sarich: “That’s a big question. I know certainly the process isn’t over. I think we’ve come through the worst of it in terms of the the delivery and adjusting processes. January was very difficult, because everyone had sort of a week and a half to prepare post-Christmas, which was nothing really and uh so January was very difficult to get things moving to the customers and get organized and it continued into February, March. So definitely we’re in a better position and I think things are starting to level off. Deliveries are becoming more predictable, our processes are more uh defined and everyone’s just a bit more comfortable with what’s happening. But saying that I think we’re still a ways away from having the dust settle on it and in terms of the broader picture of Brexit, well there’s lots of promises of benefits and that and there’s lots of challenges still to overcome so I think Brexit is gonna be the sort of thing that’s not really no one’s gonna have a clear picture of when it starts or ends uh and or no one’s gonna be able to form a real good opinion about it for at least maybe five years, say, or ten years and even at that point you look back on it and you’ll still think: ‘Well that was Brexit, but there was also the pandemic in there so everything’s kind of getting blurred together and nothing is settled or clear at the minute, that’s for sure.”

Julia Ures: “Geoff and Rod, many thanks to you for joining me today and answering these questions about Brexit, and of course many big thanks to you out there for watching and listening to In Sight KTR. Hope to see you again next time or to have you as our listeners next time. All the best, take care and bye.”

Geoff Ancliff: “Thank you.”

Rod Sarich: “Thank you.”