British bosses prepare their companies for possible ‘Brexit’
Above a factory floor of machines carving metal to within a millionth of a meter, Stephen Cheetham is preparing his company for the unknown: a British exit from the European Union.
Since the government announced a referendum on Britain’s future in Europe, Cheetham has deferred investment decisions, put off expensive hiring and even bought equipment with his own money to avoid straining the balance sheet.
The aim is to prepare his company, which makes parts for first-class airline seats and intricate scientific equipment, for what he fears will be a slump in business if Britain votes to leave the world’s biggest trading bloc.
“It is extremely difficult to prepare for and it worries me witless,” said the owner of PK Engineering. “But our disaster plan is very clear: if all the kit is paid for, we hang on to it and we ditch everybody apart from the core.”
Britain’s big listed companies have appointed lawyers and strategists to identify the risks of a British exit, or Brexit. Wary of meddling in politics, however, they have largely not detailed their plans for the June 23 vote.
But smaller companies in the manufacturing heartlands, crucial to the economy and often inextricably linked to continental Europe, are formulating contingency plans that illustrate the risks facing businesses across the country and the steps being taken to mitigate them.
At the start of 2015, almost half of Britain’s private-sector turnover came from firms that employed fewer than 249 people, according to the Department for Business.
For Cheetham his “disaster plan” involves jettisoning nearly half of his 30 employees if a Brexit compounds the drag from an already slowing global economy at his firm in the English rural town of Hereford.
Across the nearby Welsh border, Gareth Jenkins, who runs a toolmaking firm, has identified which major customers in Europe are likely to abandon him should they have to accept higher costs or slower delivery times that might come from new border controls with EU countries if Britain leaves the bloc.
He has calculated the financial impact and says in a worst-case scenario he could lose 25 percent of his turnover. He plans to tell his 91 employees in the next couple of weeks that a vote to leave could force him to lay off a quarter of staff.
