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KMF Group: preparing for Brexit

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Financial Director of metal fabrication company KMF, Jon Eeles, has been talking to BBC Radio Stoke ahead of the Brexit deadline.

Many UK manufacturers have been preparing for Brexit by stockpiling raw materials at a record pace and a lack of clarity around the terms of UK's departure from the European Union means firms are having to make contingency plans.

Jon and Stuart discuss all of the above and whether or not having European operations, a metal fabrication facility in Slovakia provides some security in a time of uncertainty.

Check out the script from Jon's conversion below or listen to the recording online here.

Stuart: KMF are leading metal fabricators with facilities in Newcastle-under-Lyme, UK and Slovakia and over 500 staff, welcome Jon. I imagine your main concerns as metal fabricators regarding Brexit and the supply chain comes from the materials you use at KMF, is that right?

Jon: Yes. As sheet metal fabricators we manufacture to order and utilise an ERP system to manage our processes, so every time we receive an order from a customer we then place an order with our supply chain for the material; we don't keep an awful lot of stock.

What we have found is that the majority of our suppliers have been contacting us via email to say "don't worry, we are holding up to 50% more stock ahead of the Brexit deadline on the 29th of March". I think everyone is worried, especially in the early days and weeks about what is going to happen with supply chains.

Stuart: How concerned are you by this? If your suppliers are stockpiling, does that mean you don't have to worry as much?

Jon: To be honest I'm not too worried, mainly because whenever I've attended conferences on the subject, all of my peers have shared the same concerns, we are all in the same book.

We've also had a very strong order book over the last few months which would indicate that our customers are stockpiling their finished products as well, and as a result, we are going to have a very strong Q1. However, there is a chance Q2 will become more sluggish as we approach the deadline and get more information regarding the terms of departure.

Stuart: Part of your operations is in Slovakia, you have another sheet metal fabrication facility based in Trencin, does that help, whatever happens with Brexit?

Jon: It does help, yes, but not by design. Five or six years ago we saw it as an opportunity and Brexit has meant that our global customers, who also have sites in Europe, order from Slovakia as its easier for them within that European market, no worries about trade levy's and so on.

What we have seen though is that some of our UK customers who are buying from Europe, have been retreating back to the UK and have begun ordering from our UK facilities again. I think like everything, there will be winners and losers and at the moment we are pretty even on it. We will just have to see what happens when we get there.

Stuart: But if your customers are stockpiling your products, they're not going to come back for another one in a hurry. Is that a concern?

Jon: Yes. That's why I worry that Q2 might be sluggish. We saw this two years ago, pre-Brexit, when we had a very strong month before the vote and a very quiet one afterwards and again, I shared this with colleagues and peers and they'd seen a similar pattern as well.

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