August 22, 2018
Leading kitchen suppliers have rejected claims that they have ‘failed to plan’ for a ‘hard’ or ‘no-deal’ Brexit, amid warnings that such an outcome will lead to chaos and confusion in the supply chain.
They have also played down suggestions that increasing uncertainty over the final terms of the Brexit deal has damaged consumer confidence.
Speaking exclusively to kbbreview in the build-up to next month’s annual Hausmesse kitchen fair in Germany, Neil Clark, UK managing director of Swiss sinks and taps giant Franke, said the company was “clearly concerned about the implications of a ‘no deal’ Brexit, but was adopting a pragmatic approach, focusing on what is within our power to control”.
“Firstly,” he argued, “let’s not forget that the UK Government will ultimately decide how to implement import customs controls in the event of no deal. They are very unlikely to introduce a set of rules that bring the country to a shuddering halt – the political backlash would be unthinkable. However, as a responsible business, we are scrutinising our inbound supply processes to ensure that we have best practices and certifications in place to ensure a compliant, secure and transparent supply chain for customs purposes. We will also work with our distribution partners to ensure that appropriate stock levels are in place to avoid short-term disruption.”
Jason Grinton, UK MD of German supplier Pronorm, also shrugged off claims that many suppliers had not planned for the various scenarios that a Brexit deal might bring and said they were simply “waiting for the terms of the deal to be agreed before responding accordingly”.
“I’m not having conversations about the implications of Brexit with retailers on a regular basis,” he revealed. “That’s not burying our head in the sand, it’s being pragmatic. We have worked through challenging times with the recession and the exchange rate fluctuations and our UK business and relationships have survived and prospered. I believe we will do the same with Brexit. Meantime, we are looking forward to this year’s Hausmesse and demonstrating the strength of our proposition for retailers.”
Grinton insisted UK business remained strong with year-to-date sales 12% ahead of their 2017 level.
“I’m not getting the feeling from my retailers that consumer confidence is low due to Brexit,” he insisted. “January and February were quiet and typically they can be, but since then our UK business has been very buoyant. Kbb in March was the best show we’ve been to so far, the acid test being new business generation. We signed up eight very good new retailers as a direct result of the show. To me that’s a sign confidence is good.”
“The contract market is also very positive. The North-West is flying as it is in the South through our selective contract partners. One of the criticisms that people try to level against German kitchen brands is that they operate on longer lead-times, but to be fair we always have. Currently, we are on eight weeks which is longer than we want, but we have put major investment in the factory, together with other measures in recent months to increase capacity and we expect to bring our lead-times back down to six weeks soon.”
“We’re running at full capacity currently, and many of our German competitors are also on eight weeks, which has got to be a strong sign of the demand for the design and quality of our products by the UK consumer.”
Christian Käsemann, MD of German kitchen specialist Ballerina, was also quick to reject claims that suppliers had failed to plan for Brexit. “In the case of a hard or no-deal Brexit, we do not have a plan B yet,” he admitted. “But I assume that both parties – EU & UK – will find a reasonable solution. The British Government should use article 50 of the EU contract. There are bylaws in the general charter that should be used by the UK to extend the date of separation exceeding March 29, 2019 in order to achieve the best possible deal. Due to desultoriness and the cowardice of the ‘Brexit fans’, too much time was wasted before anyone was clear what the British actually wanted.”
Käsemann agreed with Grinton that the start of the year was slow but “picked up significantly from April onwards” and that Brexit had “not had a big impact on sales”.
“I did a proper UK tour in June and the feedback from our customers was positive with most of them having a solid order backlog,” he told kbbreview.
“Ballerina is 10.6% ahead of last year with the UK having a better figure of about a 15% increase in turnover – mainly retail, as we do not do much contracts in the UK.”
Lead-times have been “a much bigger issue than anything else,” Käsemann argued. “They were up to 12 to 13 weeks before the summer holidays and that had an impact as we lost some orders to British manufacturers. We had numerous insolvencies last year with the biggest – Alno – in the third quarter of 2017 leaving a big gap until today.
“The degree of capacity utilisation of German kitchen manufacturing was already very high before these insolvencies. That’s why nobody was, or is, able to just step in and take over the volume from the bankrupt factories.
“Although the general order intake is decreasing, most of the German kitchen manufacturers still run an eight weeks lead-time on average – so does Ballerina at the moment,” he explained. “Every manufacturer who is able to spend money is investing in increasing volume at the moment as the Alno/Wellmann disaster still has an impact on the German industry as the overcapacities have vanished.”
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