With the Brexit vote leading to a sharp fall in Sterling exchange rates, this could spell bad news for catering equipment fabricators, who typically import raw materials such as steel.
However, CESA’s chair, Simon Frost, feels that this is not necessarily a big concern: “Given that there is no current glut or shortage in most materials, including stainless steel, the key factor is the exchange rate. Post-Brexit, Sterling has suffered, so costs for UK fabricators are likely to rise in the short term. However, many companies hedge to protect themselves from currency fluctuation by buying some foreign exchange in advance,” he detailed.
“Another factor is that raw materials, while significant, are unlikely to be the biggest cost of fabrication or equipment manufacture. Labour will be a higher percentage and, with the skills shortage, labour costs are rising.”
At the coal face of fabrication, R H Hall Fabrications’ general manager Kevin Shepherd reported: “There are many influences that affect the price of steel and the fluctuation of the Pound since Brexit is not the only factor to consider. The price of oil, plus general supply and demand have an equal effect.”
The company believes it is a positive market, with Shepherd detailing: “We are experiencing increased demand overall and this has been reflected throughout the manufacturing sector in August – with factory growth hitting a 10 month high. We utilise numerous suppliers to ensure we always purchase at the most competitive price and ensure we carry good levels of stock to avoid any unwanted surprises.”
Looking into the short term, he predicted: “If demand for steel remains high, then the price will continue to rise. We are seeing an increasing order book from a varied range of customers and are not seeing any downturn – quite the opposite! The drop in the value of the Pound has also made export very attractive. We continue to actively seek new customers in all areas and are confident in achieving this with our efficient, one stop shop offering.”
While RH Hall always considers alternative material suppliers to get the most competitive prices, Shepherd emphasised: “Building strong relationships with suppliers is of strong importance and we are considering single contract supply as a possibility for the future.”
As for the day to day material supply challenges, he commented: “Every customer may have a different requirement for the thickness, finish and profile of the finished product, so it is important that we keep a wide range of stocks available to allow us to price any job competitively – and to continue to meet the needs of our existing customers quickly and efficiently.”