The United Kingdom is both an important export market for Europe’s plastics suppliers, as well as a location for independent subsidiaries.
In a July 4 press release, Germany’s plastics and rubber machinery association (VDMA), which at 3100 members claims to be the largest industry association in Europe, noted “with regret” the British decision to leave the EU.
The releases subheads summed up the VDMA’s anxieties, stating “Great Britain until now an important market for the industry” and “Uncertainty over future ties with EU cause for concern”.
VDMA President and head of eponymously named extrusion equipment supplier Reifenhäuser, Ulrich Reifenhäuser noted that for two year’s running, the United Kingdom has been the seventh largest export market for Germany machinery, rising 6.6% in 2015 to a value of 152 million euro. In the first quarter of this year, the U.K. actually jumped to the fifth spot, rising 25.9%.
Thorsten Kühmann, the VDMA’s managing director said in the release that many of the group’s members have branches in the UK, adding that “these close ties between our UK partners and the continent will not change.” The release however went on to say:
Plastics and rubber machinery manufacturers do however fear that Brexit will have an impact on investment decisions and hope that the period of uncertainty will be as short as possible.
Many German and Austrian machinery companies have long-standing ties to the UK with Engel UK Ltd. and Arburg Ltd. in Warwick since 1963 and 1992, respectively. Those firms are joined by many other independent subsidiaries including KraussMaffei Group UK in Warrington, Cheshire and Wittmann Battenfeld Group UK, in Wellingborough.
Speaking at his company's Automotive Trend.Scaut event in Livonia, Mich. on June 29, Engel CEO Peter Neumann acknowledged the questions the UK's move poses for companies like his. "With the Brexit complete, we now have a new challenge," Neumann said. "No one really knows what will happen, but the next few years will show what influence this will have to the European economy."
Graeme Herlihy, managing director of Engel's UK subsidiary, which has 34 employees, told Plastics Technology it's too early to gauge any impact. "There's been plenty of talk, but nothing concrete," Herlihy said. "Orders are continuing to come in from projects that were under discussion pre Brexit. I think it will take much longer to establish what the impact will be.
The disruptive vote was held Thursday June, 23, with 71.8% of eligible voters, or more than 30 million people, participating, according to the BBC. By a 52% to 48% margin, “leave” voters pushed through the so-called “Brexit”, in a referendum that saw the highest turnout for a UK-wide vote since the 1992 general election.
The day before the vote on June 22, VDMA’s Chairman Reinhold Festge posted an editorial entitled “Europe Cannot Be Allowed to Die”, pointing out the EU’s deficiencies but also noting its overall positive influence on the region.
The history books might show that my generation was too lenient towards the bureaucracy in Brussels, but I am nonetheless convinced that the only alternative to this EU is a reformed, transparent and effective EU. A return to national egoism would certainly do nothing to help Europe assert itself against the increasing competition of a globalized world.
In its post-Brexit release, the VDMA said the British Plastics Federation should continue to be a member and partner of the European umbrella organization EUROMAP.
In a June 24 release laying out its expectations for 2016, the VDMA actually revised its outlook 2% higher. Whether that holds given the tumult the region is experiencing in the wake of the Brexit vote remains to be seen.
In the release, VDMA notes that 2015 output was up by 4.7% with exports 1.6% higher, before adding that business since then had “picked up markedly, prompting the positive forecast for 2016.” The VDMA cited momentum in sales to EU customers and North America. Specifically, the U.S. topped the sales market rankings, followed by China, Poland and Mexico.
In March, the Italian plastics and rubber machinery supplier association, Assocomaplast, reported its 2015 results, which marked an all-time record for exports of 2.9 billion euro, topping the previous high in 2007 of 2.75 billion. Sales to the EU helped push Assocomaplast members to that record, rising 11%.
Assocomaplast's Stefania Arioli said the UK was the seventh-largest export market for its members in 2015, accounting for more than 112 million euros in machinery, equipment and molds. Arioli noted that extrusion equipment is a particularly strong market for its members in Britain. Arioli added that Brexit was a hot topic at the association's most recent meeting, held June 28.
"Though operators fear the possible consequences," Arioli told Plastics Technology, "generally speaking, we believe it is better not to let emotions overwhelm us. A real evaluation on its impact could be done in a few months."
The View From The States
The UK is the U.S.'s ninth largest export market, accounting for more than $1.3 billion in goods in 2015, according to Michael Taylor, VP international affairs and trade for SPI. Taylor said that day-to-day operations of businesses in the U.S., UK and EU might not immediately feel an effect, but added—"All businesses engaged in the transatlantic market should prepare for the changes that are inevitably coming."