With the deadline for a Brexit deal moving ever closer, the lack of clarity and direction is beginning to become a very real concern for British industry as the prospect of a no-deal Brexit looks increasingly likely.
The difficulty for a wide range of British industries is that the future of everything from trade deals and import/export tariffs, to staff’s eligibility to work, are all still uncertain. And these factors can have a huge impact on future planning. This is most certainly the case for the UK plastics industry.
As one of Britain’s top import and export industries, plastics have continued to grow in the last ten years due to the increasing demand for pharmaceuticals and packaging. The UK is currently a world leader and one of the top 5 processors of plastics in the EU. This strong position has allowed the industry to invest heavily in reducing the impact of plastic production and waste on the environment.
Some 69% of British plastics trade is conducted within the EU and a no-deal Brexit could see the cost of these imports and exports increasing dramatically due to implementation of World Trade Organisation (WTO) fees and tariffs that are projected to increase the cost of the UK’s imports and exports by £880m (€990m).
To better understand the situation from the perspective of small business, we talked to Duncan Geddes, managing director at Corby-based independent foam manufacturer and convertor Technical Foam Services.
“Despite being a small business, we, like many British companies, are part of an international operation. We import materials from Europe and around the world, and changes in trade tariffs will impact what we can spend on continuing to develop new, more eco-friendly ways of manufacturing foam products.”
One of the hot-topic issues of 2018 has been the impact of single-use plastics on the environment. The UK plastic industry is proud to be progressive and innovative, and the result is that the amount of plastics going into landfill is gradually being reduced, with energy recovery becoming an increasingly popular option in recent years.
“The plastic industry is doing a lot to minimise its environmental footprint, from improving production techniques and reducing the amount of waste going to landfill, to energy recovery and the development of more eco-friendly adhesives,” said Geddes.
In fact the UK Plastics Pact, which was launched in April 2018, saw 42 major businesses representing 80% of the plastic packaging sold in UK supermarkets, commit to eliminating single use plastic and increasing the amount of packaging that could be recycled. This world-first pact demonstrates how seriously the UK takes its position as a leader in the industry.
Geddes: “As the industry continues to move towards sustainability, the next major issues for us are changing the public’s mindset around waste and ensuring that the Brexit transition is as smooth as possible - so that it doesn’t result in a lack of funding for industrial innovation.”
Sustainability goals under pressure?
Of all the fields where EU directives have a large impact on UK policy, environment is one of the most influential. If no longer bound by the terms of the EU Renewable Energy Directive (RED), the government would be free to lower targets and soften rules, in turn reducing the pressure on businesses to achieve green objectives. These targets cover areas as broad as clean air and household recycling. While they are challenging and expensive to implement, they are an important part of reducing negative environmental impact.
“Tariff increases will significantly affect our ability to compete internationally as a business. The focus that is currently turned towards sustainability and improvements in materials will be replaced by adapting to the challenges created by rising tariffs,” Geddes pointed out.
The consequences of dramatic changes involving international trade and managing the possible loss of skilled employees may see the plastic industry’s positive momentum towards environmental issues stall. If the final Brexit deal results in increased operating costs, it is logical to assume that fields such as research and development would be the first to be scaled back and the environmental progress that had been made could be lost.
While many EU regulations will no longer be enforced after Brexit, Geddes is hopeful that regulatory equivalence is maintained: “The existing EU legislation is well placed, so creating separate, similar UK guidelines is just an unnecessary duplication of efforts. We import and export a significant volume of raw material to and from EU countries and the last thing we want is the added confusion and bureaucracy of having to adhere to two different sets of rules simultaneously.”
The UK plastic industry relies on importing materials and machinery from the EU, and so it is vital that access to the single market remains after Brexit to enable it to retain the same £2 billion surplus it currently enjoys worldwide. But this is not in the hands of the industry, especially small businesses.
“Having a strategy and planning ahead are key to navigating such a potentially damaging situation, and Technical Foam Services have done this by building relationships with suppliers from around the world in addition to our suppliers in the EU,” says Geddes. “We are also dedicated to supporting environmental improvement across the industry, whatever happens. Going forward, it will be vital for other businesses in the British plastics industry to maintain their own dedication to sustainability, as well as working to mitigate the negative impacts on business that will come with our exit from the EU .”
Technical Foam Services, established in 1990, in Corby, Northamptonshire, is recognised as the UK market leader in the specialist foam industry.