Brexit may raise costs and delivery times in UK jewellery trade, but businesses will adapt!
The following article was written by Jewellery Outlook Editor David Brough for International Jewellery London (IJL), which will take place from September 1-3, 2019. David is IJL’s Precious Metals and Gems Editor.
Brexit may potentially raise costs and delivery times in the UK jewellery trade, but businesses will adapt, industry leaders say.
As the clock ticks towards the “Halloween” deadline, the main risks appear to be any future changes to the tariff regime, combined with possible customs delays.
“With specific reference to the UK jewellery industry and the impact on import and export, we already have tariffs on goods, so there’s nothing new there,” said Andrew Morton, Managing Director of Weston Beamor, The Creative Jewellery Group, a leading Birmingham-based jewellery manufacturer. “However, without a settlement, it is very difficult to judge where future tariffs may settle and therefore, what effect these may have.”
Gary Wroe, Managing Director of Hockley Mint, another leading Birmingham-based jewellery manufacturer, said: “Trading may be different in the future with the EU and tariffs may become another barrier to trade. We have to remain optimistic and change to suit the market environment.”
Simon Forrester, CEO of the National Association of Jewellers (NAJ), said the NAJ could lobby for a preferential luxury goods sales tax regime in the UK after Brexit. “If and when Brexit happens and we can lobby UK government successfully, we could see a preferential luxury goods sales tax regime compared to the EU, which would bring in significant numbers of European buyers,” he said.“If we do take charge of our own laws, NAJ will be ready to lobby UK government to help the jewellery industry, for example by seeking less regulation or reduced business rates.”
Looking further afield, Brexit can offer better access to markets outside the EU, such as China where UK goods are held in high regard, Forrester added.
Customs delays could pose an immediate challenge after Brexit, including red tape, but some solutions are on offer.
“The key issue for the UK jewellery industry is the movement of goods across the EU borders. As a company that can supply a huge amount of variety in way of metal combinations and designs, it is impossible for us to stock hold every single item,” Wroe said. “We therefore have to deliver to exacting deadlines ensuring any delay is minimised. However, with the possible introduction of more stringent border controls delay will become inevitable.”
This will become an issue that UK jewellery manufacturers will have to build into production lead times and to ensure that they maintain a reliable and consistent source for the export market, Wroe added.“The flip side is goods coming into the UK from the EU, whether raw materials or finished goods. There has to be greater planning from all. We live in a high demand fast turnaround society and this will not make things any easier.”
Himanshu Shah, director of Hatton Garden-based fine diamond jewellery supplier Andre Michael, said: “For UK companies exporting into the EU, Brexit will create a problem because of customs formalities – paperwork will be a problem. If you have to send a ring for repair in Germany, for example, additional paperwork will become a cost. Also, anything coming in from Europe will create more paperwork.”
Longtime IJL supplier Malca-Amit UK Ltd is one example of a logistics supplier that is working hard to iron out any delays and seek hassle-free solutions to changes in shipping and customs regimes. Last year Malca-Amit introduced its Temporary Admission Scheme for exhibitors at IJL, removing the headache of the 23 percent of taxes and duties normally paid upfront to UK Customs.
Sterling exchange rate volatility can affect trade flows post-Brexit, with any weakness in the pound possibly boosting export opportunities.
“Stable exchange rates are always the preferred option,” Morton said. “There are ways to mitigate some of this (forex) exposure; for example, sourcing from within the UK where possible, could be one such avenue.”
Wroe said: “If sterling remains weak, then as a manufacturer we are more attractive to the UK market and there are also further opportunities on offer to export. Does sterling strengthen once some sort of deal is found and everyone understands the future trading relationship? Or is the trading relationship detrimental to sterling, and investment and growth in the UK isn’t as it could have been?”
Whatever the near-term consequences of Brexit, UK industry leaders are confident that businesses will adapt to the new challenges. “We have to remain optimistic and change to suit the market environment,” Wroe said.
Morton said: “As an industry, I believe that we must focus on our strengths, continue to promote the positives and seek out new and existing opportunities. People are still getting married, having Christenings, graduations etc.”
He added, “We are focused on working with our retailers to face the challenge by better understanding current UK consumer demands and responding with beautiful, high-quality product, backed by through-the-line service. “During uncertain times, such as these, no-one can afford to stand still; smart businesses will adapt to market requirements to survive and thrive.”