Planning for Brexit…or otherwise
Fundamentals has reviewed the potential Brexit scenarios – based on the best information currently available - from a company, supplier, customer and systems perspective.
Our conclusions can be divided into two main categories: financial and production.
The financial landscape
Whether relating to Brexit or any other global or regulatory issues, financial institutions do not like uncertainty which could lead to a devaluation in Sterling. This is a very strong possibility should the eventual outcome be a ‘No-deal Brexit’. On the most basic level, most businesses will cease trading extremely quickly if they run out of cash and a major sterling devaluation could have a profound effect on reserves. As a result, Fundamentals is maintaining a high level of liquidity, with cash available supported by strong credit worthiness.
Equally, Fundamentals’ customer base comprises large critical-supply services. Our contractual arrangements ensure they adhere to specified payment terms to minimise cashflow risk, although we recognise that changes in payment profiles or through acquisitions and mergers are always a possibility – with or without Brexit.
Fundamentals has two core groups of suppliers: strategic and commodity. The former provides a unique product to Fundamentals, whereas commodity suppliers offer a product which can be sourced from alternative providers.
Keeping production on track
All of Fundamentals’ strategic suppliers are UK-based, with the majority themselves relying on UK supply for materials and components, with no dependence on the EU. However, with sourcing (and therefore stocking) certainty comes a degree of pricing uncertainty, as potential supply chain cost increases are likely to be reflected in component or service supply prices.
When it comes to commodity suppliers, Fundamentals is currently supported by one direct European supplier and one international supplier. The latter sources bare circuit boards from China and, as is likely to be the case with most companies sourcing business-critical products, we have reviewed potential Brexit scenarios with the supplier themselves. We have also added a contingency plan that would allow us to source from an alternative UK supplier before exhausting stock if required.
Under normal circumstances, we maintain average stock levels from all of our commodity suppliers at four months. However, due to Brexit uncertainty, we are planning to increase this to six months with alternative suppliers available if required.
Setting a standard
Throughout UK industry in general, and the energy sector in particular, the much over-used epithet “keep calm and carry on” could not be more appropriate at the moment.
While legislation and regulation may change in the long-term, like every other company in our industry, Fundamentals can only work to the highest standards currently available. In our case that means products being designed, manufactured and tested in the UK by our employees in compliance with ISO9001:2015, ISO14001:2015, ISO27001:2017 and OHSAS 18001:2007. This is supported by a recent Achilles B2 audit receiving 100% in all categories for both systems evaluation and on-site audits.
We, like the rest of the UK, will plan for the worst and hope for the best.