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Brexit forces businesses to take new course

The fall of the pound and uncertainty about the future trade relationship between the EU and the UK is making Danish companies cultivate new markets. Toppac, Rambøll and Pressalit are worried, but also count on maintaining their position in the UK.
CEO in Toppac, Søren Mark Andersen, has a strategy for future-proofing the company’s exports when the UK leaves the EU on 29 March 2019.

Publiceret: 17.05.2018
Af Jeppe Bo Rasmussen mail

Uncertainty about Brexit continues to reign.

There is less than a year until the UK leaves the EU, and although recent months have seen progress in negotiations, the outcome remains wholly unpredictable.

But CEO of Toppac, Søren Mark Andersen, has a strategy for future-proofing the company’s exports when the UK leaves the EU on 29 March, 2019.

“We have already started cultivating other markets in the EU, and we see particularly good opportunities in Germany. 90% of our production is exported, and transport costs are important in our field, so it is necessary to grow in neighbouring markets,” explains Søren Mark Andersen.

See also: Key indicators: The arrow is still pointing in the right direction for Danish industrial production

Will remain in the UK

But the UK plays a critical role in Toppac’s future. The company is therefore also searching for ways to maintain their position in the market.

“A large part of our revenue is made in the UK. We sell our packaging products to the British food industry and have sales in British pounds. In order to keep prices stable for our clients, we have borne the losses caused by the pound’s fall,” says Søren Mark Andersen.

The British food industry is among the world’s most innovative. Hence, Toppac has also considered expanding by investing in local production, but Brexit means that the company has put its British plans on hold for now. Their continued presence in the UK is, however, necessary.

“Our turnover in the British market has fallen markedly, but we are maintaining our focus on the market because our cooperation with British clients is important for our innovation and development,” says Søren Mark Andersen.

See also: Blog - it's time to boost EU's digital IQ

Hoping for political resolution

Toppac’s 30 employees and several robots keep production going around the clock, 360 days a year. T

his means that Søren Mark Andersen can still keep up with British competitors, even though they benefit from both the pound’s fall and lower wage and transport costs. He hopes to be able to maintain and expand his market share – also when Brexit becomes a reality.

“We are just waiting for political resolution so we can gain clarity about the development of the British economy and our future market access. When this happens, I also think the pound will stabilise at a slightly higher level,” says Søren Mark Andersen.

Fall in investments

Toppac is far from the only Danish company that must arm itself with patience. In recent months, there has been progress in negotiations regarding the actual divorce between the EU and the UK as well as a possible transition phase, which would allow the UK to remain in the single market until the end of 2020, despite formally leaving the EU on 29 March, 2019.

But this does not convince Søren Holm Johansen, Group Executive Director at consultancy company Rambøll, which has 1,300 employees in the UK.

“We see that general insecurity regarding the future of the British economy means that private investment is falling, which results in less construction activity. The UK has therefore already become a less attractive market for us, and we are looking at other markets in which to expand our business,” says Søren Holm Johansen.

Tariff barriers?

At Pressalit, CEO Kim Boyter is also busy adjusting the company’s activities in order to meet the challenges brought about by Brexit. But the UK is an important market, so he hopes that politicians will reach a trade agreement between the EU and the UK that will allow Pressalit to continue its British exports.

“I am particularly worried about the risk of tariffs on our products. 10% of our revenue is made in the UK, and even though our profits in the British market are decreasing as a result of the pound’s exchange rate, we are still able to compete with local manufacturers. But this will require that our products are not made more expensive by tariffs and administrative burdens,” says Kim Boyter.

If that happens, several of his clients would choose local manufacturers instead of Pressalit, the CEO believes.

Pressalit supplies solutions for bathrooms for people with disabilities and the elderly to the public sector. Kim Boyter therefore keeps a particularly close eye on how Brexit will impact the UK’s economy.

“The development of the UK’s economy is highly significant for us. We are dependent on the public sector having the funds to prioritise new and innovative solutions for groups of citizens with special needs, as well as its continued interest in importing these solutions,” emphasises Kim Boyter.

See also: The EU simplifies cross-border VAT

Rambøll: Freedom of movement impacted

Rambøll fears restrictions to the free movement of workers once Brexit becomes a reality. This would impact the company’s stationing and recruitment of employees.

“Unfortunately, we expect that it will become more difficult to transfer employees between the EU and the UK, but we hope for a final agreement that is as close to the EU’s current rules on free movement as possible,” says Group Executive Director at Rambøll, Søren Holm Johansen.

Another challenge is that Rambøll currently recruits employees from across all of Europe to their British offices.

“It is highly uncertain whether London and its environs will continue to be as attractive post-Brexit, particularly for the many young southern European engineers,” explains Søren Holm Johansen.

In general, the Danish consulting sector is particularly worried that Denmark’s EU opt-out may create special problems for Danish businesses when Brexit threatens the freedom of movement.

Denmark will be left out when the EU and the UK reach an agreement regarding the free movement of workers in the future, and this may mean that Danish companies and subsidiaries in the UK are unable to send British employees to Denmark or vice versa.

“It is important that we reach a special agreement with the UK. It should follow the deal that the EU negotiates regarding workforce mobility, so that we are not left worse off than other businesses in the EU single market,” says Søren Holm Johansen. 

See also: We must strengthen EU's single market

The UK has already become a less attractive market for us, and we are looking at other markets in which to expand our business.
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PUBLISHED: 5/17/2018 LAST MODIFIED: 5/17/2018