Mark Stephenson, chief executive of components distributor PWS, has insisted any plan to build extra stock into the business in the period after Brexit would cost up to £4 million.
Speaking exclusively to kbbreview at the company’s HQ in County Durham, Stephenson (pictured) confirmed PWS had a Brexit plan in place but “couldn’t plan for every scenario”.
“What we do know is, if we want to try to build stock and cover our requirements for a period after Brexit of six to eight weeks, I’d probably have to find £3 million to £4m,” he said. ”And there’s probably a million quid’s worth of error and cost involved in that – pure cost. So it’s a big deal for us.”
He claimed Brexit was currently “a watching brief” but that PWS “probably had better relationships with its European supply chain than any other business in the sector”.
“We have quite broad access to the whole market and we know of people who are buying now and putting stock in to cover them for the first six to eight weeks of whatever might happen after Brexit,” he said.
“We’re a business that has streamlined the supply chain to be able to supply a customer with what it wants tomorrow. For us to get our stock right for April and May next year, and have to place an order next month, which is what we’d have to do, there’s an awful lot of risk coming in for the business. Stock is our enemy. The answer is to keep a close eye on it.
“Virtually all our stock comes in from continental Europe or further afield. For a business like ours it’s very, very difficult to plan around something where you don’t have any details around how you should be planning.
“The pound took a hammering and I suspect it’ll take another one if we don’t get it right and that’s what affects pricing. We’re hedged on currency. We have a plan, but you can only hedge so far. If I had the answer to the questions, I’d tell you what my plan is. But I don’t even know what I need to plan around and that’s the problem.”
Stephenson’s comments come five months after he confirmed he would be taking a greater personal involvement in the direction of the company following the surprise departure of former managing director John Lennon.
This has included a consolidation of its brand portfolio, which he admitted had become “a little confusing” but was in the process of being realigned.
“We will be presenting a very strong message within the very early part of next year,” he revealed. “I wouldn’t say we’ve re-strategised since [John Lennon’s] departure, but we have re-strategised. It’s not something we can spin on a sixpence. We’ve taken a very good look at what we’re doing and what we need to do better. We’ve listened to what customers say they want from us.”
The company has also just opened a brand new paint factory costing over £3m in an effort to assure customers it will continue to invest despite increased market pressures.
Stephenson described the current market as “particularly challenging”, but insisted that the company was “fine and doing what it should” and that group sales this year would be in the region of £75m.
Asked how kitchen giant Omega could claim it had “planned meticulously” for Brexit, Stephenson said: “Given that they buy from the same countries that we buy from, and some of the same factories, I don’t know. The only way they can plan is to either make everything themselves or put stock in. Maybe it’s a lot easier for them to put stock in than it is for us. We’d have to go out and rent space.”
But he went on to claim that the deadline for Brexit would probably be extended.
“My gut feeling is that it will be a fudge and we’ll end up with a period of time where we’ll all work out what to do. Our local MP here is the successor to Tony Blair because this was Blair’s consistency. He spent some time with us back in June and he talked a lot of sense and his view was that there’ll be a fudge. Other people who I speak to, who are closer to it than me, suggest there’ll be a fudge, all the banks suggest there’ll be a fudge. By fudge, I mean there’ll be an extension.
“We’ll probably get some breathing space but the consumer will sit on their hands in a flash. It takes months if not years for them to get off their hands.
You can clearly establish which box I ticked at the referendum, but we’ve just got to deal with it. It’s a rotten situation to be in for the whole industry, because it lives on the back of products that are manufactured in continental Europe or further afield.”
• For the full interview with Mark Stephenson and PWS group marketing director Aidan Jackson, see the February issue of kbbreview