The challenges posed by the UK’s exit from the European Union loom large for any retailer moving goods across the English Channel, but for those companies that also have manufacture their own products the threat is even greater.
This is the impression that one gets from speaking to the CEO of Spreadshirt, Philip Rooke, who claims that even a so-called “soft Brexit”, in which the UK ceased to be a member of the organisation but retained membership of its single market and customs unions, would create challenges.
Spreadshirt, a print-on-demand T-shirt company which netted revenues of €107 million last year, currently ships across the EU as well as to the US and Canada.
“Every time you have to cross a border it’s difficult,” says Rooke. “Norway and Switzerland (which both have close relationships with the EU despite not being members) are a bit of a nightmare for us due to the additional borders and bureaucracy.”
Within the EU the company prints shirts in the Czech Republic, Poland and Germany. But for every T-shirt shipped to Norway there is a delay even if the tax has already been paid, Rooke says.
“There is a delay of one to three days for every T-shirt. This is for a country with only six million people, so for the UK to check everything coming across the border when there are more than ten times that number of people will be very difficult.”
The UK government released guidance last month on trading with the EU if there ends up not being an agreement on the UK’s future relationship with the bloc before it formally exits.
It said that consignments sent between the UK and EU would be subject to World Trade Organisation terms, meaning the introduction of additional tariffs. It said that any companies exporting to the bloc would need to consider how supply chains will be affected and may need to renegotiate existing contracts in the light of any changes to customs and excise procedures.
Rooke is more concise in his summary: “Hard Brexit or no deal will be a disaster.” He pours cold water on any hopes that a Canada-style deal, which eliminated 98 percent of tariffs between Canada and the EU, would be a solution.
“It has taken a very long time for Canada to get where it is (the trading agreement took over seven years from the beginning of negotiations to signing) and even then I don’t attempt to ship T-shirts from Canada or the US to Europe.”
If worst comes to worst and the border becomes too much of an obstacle, Spreadshirt will consider building a factory in the UK, says Rooke.
However, he says this will put up prices for consumers because it will be a relatively small and less efficient factory.
No-one can predict with any certainty whether the UK government will make a success of exiting the EU, but the process is forcing cross-border retailers such as Spreadshirt to ask some difficult questions.
Image credit: Spreadshirt