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Ed’s view: The stockpiling isles

CN editor pic 2019 crop

None of us can escape the all-encompassing vortex that is Brexit right now. And this is equally true for the catering equipment industry.

While our MPs are still arguing amongst themselves, trying to untangle the Gordian knot the UK has got itself into, businesses across the spectrum are still stuck at this late stage with no idea what will happen past 29 March 2019.

With national news stories of consumers stockpiling food and supplies, the catering equipment industry has been doing this in its own way. Supplier Certa Cooking Equipment announced it is upping its stock of Adventys induction equipment in advance of the deadline, and the AFE Group, the parent company of Williams and Falcon, stated in its latest annual report that it is working to “maintain continuity of production and supply through increased inventory and warehousing”. Electrolux too is now holding up to an extra 4 weeks’ stock in order to mitigate any Brexit effects.

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Talking to Hoshizaki UK director Simon Frost last month, he detailed that the company was stockpiling Gram refrigerators and parts for the Hoshizaki ice machines built in Telford, while likewise the firm’s European counterparts were upping their imports of the icemakers themselves.

This is probably about the most any company can do to prepare for the unknown, but even these steps bring challenges. Stockpiling requires having enough warehouse space to cope with more appliances, whether that is a manufacturer, supplier, or a distributor who has decided to purchase the kit in readiness for its operator clients.

Then there is the cash flow issue. Importing or purchasing more equipment than usual can put companies under a great deal of financial pressure. So much liquidity will be tied up in the extra produce that it is really only the larger businesses which can afford to stockpile. And while each firm will hope that the appliances are sold on in due course, there is no guarantee that this will happen – especially if the economy takes a dive due to a chaotic Brexit.

The supply chain could be stuck with a lot of stock that they either cannot get rid of at all, or have to slash the prices of to move on. Neither option is particularly palatable.

Or the other alternative is that the supply chain is indeed disrupted as the nation tries to discern exactly what trading rules the UK is operating under. Equipment demand could remain high so the stockpiles prove not only to be necessary but actually not enough, and distributors and end users are stuck waiting for more imports that will be delayed at the ports.

Now any of these could prove to be brief, fleeting scenarios and overall the industry could sail through or bounce back from a short-term dip. But will this take down any companies in the meantime?

You may think these possibilities are all part of ‘Project Fear’ or a big overreaction, but personally, I think it’s better to over-prepare and be wrong than under-prepare and be gone. Strap in and let’s just get through these next few weeks.

Tags : BrexitEditor's Viewstockpiling
Clare Nicholls

The author Clare Nicholls

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