Brexit – the calm before the storm
It cannot be denied that manufacturers ar...
Manufacturing has the potential to be one of the most affected sectors as a result of Britain leaving the EU.
It cannot be denied that manufacturers are in an uncertain position and it is not likely to improve any time soon – we still have a total absence of proposals for our new trading relationships and manufacturers in particular desperately need to know what the plan is going to be. Businesses in this sector are at the heart of the supply chain and will therefore be most impacted by the potential imposition of import and export tariffs if the UK leaves the free trade area.
If we leave the EU Customs Union there will be a huge raft of new bureaucracy to comply with. Proof of origin requirements will be needed for each element of a product as these goods enter and leave the Customs Union. The Brexit won’t mean less red tape for manufacturers in this situation and paperwork could increase sustainably.
Of course, for exporters there is good news at the moment as these businesses are able to capitalise on the weaker sterling, but as existing currency hedges start to expire the costs of imports is set to rise significantly.
There is also a concern amongst Tier Two and Three manufacturers that, as a result of Brexit, OEMs may think about locating projects elsewhere – definitely a concern for the longer-term.
Ultimately we’re in the calm before the storm – once the Article 50 button is pushed it will be a hectic and chaotic two years of renegotiating to get the trade deals finalised. There’s no doubt this will be a near impossibility – negotiating these sort of deals usually take around 10 years and it is highly likely we will be left in a tough position.
However, it’s not all doom and gloom and in this calm there are some very practical measures which manufacturing businesses can be implementing to ensure they’re in the best possible position to trade profitably and even grow.
- Firstly, it is worth thinking back to the last recession and the important lessons learned there. In harder times, businesses will inevitably ask their lawyers to pore over contracts much more carefully, looking for a get-out clause. In the heat of the moment of a deal being done it can often be the case that the terms and conditions are skimmed over in a rush to get the champagne popped open. Those that have tightened their contract due diligence and exercised caution will be in a stronger position when this Brexit storm hits.
- Businesses should look at running a Brexit Risk Audit. This audit should look to identify the exact issues which could impact the business and put in place procedures now to manage these points.
For example, the audit could cover:
- Checking bank facilities It is important to renegotiate terms now with banks while they are still pushing the message they are open for business and willing to lend. This may change. For example, check the expiration dates on any fixed term loans. Even if they don’t expire for another year it may well be wise to think about discussing terms now.
- Managing impacts on your workforce The manufacturing sector has a high proportion of EU workers and for many businesses these employees will be difficult to replace. The first thing a business can do is set about reassuring workers. By opening a dialogue now it will help workers know what they’re facing. Employers can also recommend that those who have been in the UK for five years should consider applying for residency. It will help provide some certainty in these uncertain times.
There are some practical steps and processes which manufacturing businesses can put into place. In the midst of such confusion and economic upheaval, businesses would be well advised to be realistic and ensure they’re in a position to capitalise on any opportunities which may come their way.
Adam McGiveron is Partner at Shakespeare Martineau
Follow @ManufacturingGL and @NellWalkerMG
Ultium Cells LLC/Li-Cycle: Sustainable Battery Manufacturing
Ultium Cells LLC - a joint venture between General Motors and LG Energy Solutions - has announced its latest collaboration with Li-Cycle. Joining forces the two have set ambitions to expand recycling in North America, recycling up to 100% of the scrap materials in battery cell manufacturing
What is Ultium Cells LLC?
Announcing their partnership in December 2019, General Motors (GM) and LG Energy Solutions established Ultium Cells LLC with a mission to “ensure excellence of Battery Cell Manufacturing through implementation of best practices from each company to contribute [to the] expansion of a Zero Emission propulsion on a global scale.”
Who is Li-Cycle?
Founded in 2016, Li-Cycle leverages innovative solutions to address emerging and urgent challenges around the world.
As the use of Lithium-ion rechargeable batteries in automotive, industrial energy storage, and consumer electronic applications rises, Li-Cycle believes that “the world needs improved technology and supply chain innovations to better recycle these batteries, while also meeting the rapidly growing demand for critical and scarce battery-grade materials.”
Why are Ultium Cells LLC and Li-Cycle join forces?
By joining forces to expand the recycling of scrap materials in battery cell manufacturing in North America, the new recycling process will allow Ultium Cells LLC to recycle cobalt, nickel, lithium, graphite, copper, manganese and aluminum.
“95% of these materials can be used in the production of new batteries or for adjacent industries,” says GM, who explains that the new hydrometallurgical process emits 30% less greenhouse gases (GHGs) than traditional processes, minimising the environmental impact. Use of this process will begin later in the year (2021).
"Our combined efforts with Ultium Cells will be instrumental in redirecting battery manufacturing scrap from landfills and returning a substantial amount of valuable battery-grade materials back into the battery supply chain. This partnership is a critical step forward in advancing our proven lithium-ion resource recovery technology as a more sustainable alternative to mining, " said Ajay Kochhar, President, CEO and co-founder of Li-Cycle.
"GM's zero-waste initiative aims to divert more than 90% of its manufacturing waste from landfills and incineration globally by 2025. Now, we're going to work closely with Ultium Cells and Li-Cycle to help the industry get even better use out of the materials,” added Ken Morris, Vice President of Electric and Autonomous Vehicles, GM.
Since 2013, GM has recycled or reused 100% of the battery packs it has received from customers, with most current GM EVs repaired with refurbished packs.
"We strive to make more with less waste and energy expended. This is a crucial step in improving the sustainability of our components and manufacturing processes,” concluded Thomas Gallagher, Chief Operating Officer, Ultium Cells LLC.