RECENT research by the British Chambers of Commerce (BCC) and the UK Government’s Public Accounts Committee has highlighted the significant burden which Brexit has placed on companies across a range of sectors – and AGCC members are amongst those hardest hit.
According to the BCC survey of more than 1,000 exporters, almost three out of four (71%) said that the EU–UK Trade and Cooperation Agreement (TCA) is not enabling them to grow or increase sales.
The majority view is that it has led to rising costs for companies and their clients; small businesses have neither the time nor money to deal with the bureaucracy it has introduced; and it has deterred EU customers from considering UK goods and services because of the perceived costs and complexities.
Walker’s Shortbread is one Scotland’s biggest food exporters and Managing Director Nicky Walker, great grandson of Joseph Walker who founded the company 124 years ago, told Business Bulletin that the inability to find staff had caused a major problem for the company.
Around 50% of Walker’s iconic tartan-boxed products, produced in Aberlour and Elgin, are exported to 120 countries. Amongst the host of honours won are three Queen’s Awards for Export Achievement and Walker’s holds a Royal Warrant from the Queen.
“It has been a nightmare and the thing that affected us most on the announcement of Brexit was the downturn in the availability of the traditional migrant workforce,” he said.
“There is a degree of seasonality to our business, but it does get busier towards Christmas and therefore we are busier from May taking on additional seasonal workers, many of whom have traditionally come from across Europe.
“We have a permanent workforce of around 1,200 but through the busy period, that number has gone up to about 1,700 to supplement our order requirements. Since the announcement of Brexit it appears there have been no foreign nationals coming across in any great numbers and I am sure the berry pickers and the potato guys are all feeling the same thing.
“Last year we were about 350 down on the staff numbers of three years ago. It looks as if people just don’t want to come and last year it was exacerbated by CV19. It was an ‘imperfect storm’ and we’ve lost sales over the last couple of years, compared to our normal level. We picked up a little last year but I imagine it will take a couple of years to get back to the levels we experienced through 2018/19.”
Nicky said he hoped that change could be introduced, and rapidly, to allow and encourage seasonal workers to come to Scotland.
“I think the whole country has benefitted from migrant workers whether it be the retail industry or the hospitality industry and now everyone appears to be struggling because of the lack of people currently in the country who are willing to do these jobs.”
He said that as soon as Brexit was announced Walker’s had looked at further automation possibilities to alleviate the problem, which helped last year, and they would be looking at more operations to potentially automate to increase efficiencies and production.
A further problem was shipping goods overseas and for lorries coming to and from Europe it could add anything from a week to two weeks to deal with the extra paperwork which had created a massive amount of work for the company’s export team.
“It is more efficient for us to buy our novelty tins from the Far East and ship them in but with the added complication of the Suez Canal problems the traditional cost of about $4,000 for a container has gone up three or four times.
“America is a big market for us and we were also hammered with unprecedented increases in prices to ship there. This must be affecting every sector globally.”
Euan Shand, Chairman, has guided Duncan Taylor Scotch Whisky Limited, the Huntly-based independent whisky bottler, to global success since acquiring it 20 years ago as a dormant business.
He described Brexit generally as a “total disaster” but not for his company.
During a visit to Huntly from Los Angeles, where he is now based, he told Business Bulletin that the problems with Brexit had been compounded by CV19.
He said the company, which exports continuously to 60 countries, had lost a significant amount of business in Europe but had more than compensated for that by an increase in their business in America.
“But that wasn’t because of anything done by the government,” he said.
“That was because we were already in the States and if one market dies, you put all your emphasis on another market and we had the intelligence to enable us to do that.
“Transport was a nightmare and the changes in customs and regulations were a nightmare. CV19 couldn’t have come at a better time for Brexit because you just couldn’t place where the issue was coming from? Was it Brexit? Was it CV19?
The brief period we had up until CV19 hit was messy. Transportation was messy. People were unsure about pricing anymore because we were no longer part of the European Union. I was quite clear on my side but customers were unsure what they would have to do because of the changes. So there was a period in Europe where everybody was a little bit confused about what came next. Then came CV19. That brought serious confusion because we didn’t even know if we would have customers but thankfully people started drinking from home.
“Because we supply specialist importers and not volume run of the mill whisky we didn’t lose bars and restaurants and hotels. Some of our biggest customers in America are specialised liquor stores but in places like China and Taiwan they are specialist guys dealing in single malts or aged blends.
“Things have bedded down but prices of dry materials – boxes, labels, bottles and corks has gone sky high, although that has not been reflected in our selling prices.
“The problem with anything in Europe is price and the cost of the haulage. Haulage prices are massive and shipping is nigh impossible. Trying to get on a boat to go anywhere is an issue although that’s not all Brexit, that’s CV19 as well. Things are so much more difficult than they were.
“Our sales in Europe are probably up now because we are trying harder.
“Before, we were enjoying steady growth in Europe, had good customers but didn’t spend a massive fortune to build up the business. After CV19 and Brexit we had to push things harder and we’ve noticed a fairly substantial increase, but it hasn’t been aided by Brexit. We have employed more people and spent more money and built things up.”
Euan has whisky in his blood having grown up in a house in the grounds of the Glendronach Distillery where his father Albert was the Manager.
“My love of Huntly and the people is deep rooted,” he said. “We have already invested heavily in the area with our headquarters, our Whiskies of Scotland shop and our online retailer The Spirits Embassy are all based in the area.”
His company has also bought The Bank Restaurant and Café, which has just reopened, and The Castle Hotel in Huntly which will open next year after an extensive refurbishment to international standards.
“In the hospitality side of our business trying to get labour is extremely difficult. We are trying to recruit waiting staff and chefs and in previous times, when borders were open, it was dead easy, now it is nigh impossible.”
Scotland’s potato merchants have suffered a significant blow since the end of the Brexit transition period. Since January 1 last year they have been prohibited from exporting seed potatoes to the EU because of the European regulations under which they were perfectly acceptable on December 31, 2020.
A spokesman for the British Potato Trade Association said that DEFRA has, on the behalf of the Scottish seed potato industry, been in discussions with the European Commission since the transition ended but as yet had made no headway – “and there is no prospect of a resolution in the near future,” he said.
Banff-based exporter Alan Twatt (Potato Merchants) Ltd is typical of the many companies for which there has been an impact.
Seed potatoes are grown to be replanted to produce a potato crop.
Scotland is a world leader because the climate, especially in the North, doesn’t favour the aphids which spread virus diseases and the country is responsible for around 80% of UK seed potato exports.
Ahead of Brexit, the family-owned Banff-based merchant exported around 3,500 tonnes of seed potatoes globally every year and Company Director Dianne Wiseman said that, as they feared, since January 1, 2021, they have not been able to send any seed potatoes to Europe.
“Our concern then was that we did not know how long it might take for new agreements to be set up to allow us to do that, and that situation is unfortunately unchanged.”
She said the impact would be far greater for larger exporters but that one consolation was that there had been little impact on exports to Egypt, Scotland’s main market, Morocco and Saudi Arabia – “although there has been a slight increase in import tariffs in these countries.”
“Europe is a different matter. We send to several countries in Europe and because it was an open market, we simply loaded them on the lorry and off they went, but that no longer happens.
“When potatoes are exported to non-EU countries they have a plant passport called a phytosanitary certificate and we hoped that once we left the EU, phytosanitary certificates, or some sort of new movement certificate, might come into play for tatties going from Scotland to mainland Europe but that hasn’t happened.”
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