Thread by @EmporersNewC

Nothing to do with Brexit?

Well I can prove otherwise on that score.

(Thread)

https://twitter.com/JustinTomlinson/status/1097507582820995072

Nobody knows the exact percentage of trade that that comprises of intermediate products in the supply chain, but the last study over 10 years ago suggested that it was 56% of goods. I don’t know what it is now, but it’s a lot.

A number of factors, including the cost of transportation, has resulted in companies seeking to become more efficient by locating their supply chains as near as possible.

supplychainquarterly.com/topics/Logisti…

That’s not such of a big problem if you have frictionless trade with a massive market just a few miles off your coast

But if your whole trade policy is “We are going to sell to Brazil, China, India, Australia and New Zealand” then you are about to try and implement something that flies in the face of what is happening in the world.

It doesn’t just come down to costs. The further out a supplier is, then the longer the lead time. The longer the lead time, the more a company has to trade off plant costs vs risk of downtime.

A plant owner or retailer that has to estimate what they will use a month in advance isn’t necessarily going to be accurate. The items that are not perishables can be mitigated with more storage. This, however, is not free.

It is what we’re doing in the UK because we HAVE TO.

We are currently damaging the bottom line of our companies.

theguardian.com/politics/2018/…

Also, the further out your supply is, the likelihood that freight will stop at multiple ports which will increase the risk of delays. This adds variability into the process, which is always bad news for supply chains.

So let’s revisit that Brexit vision of a future Britain shall we?

They used to say “We’ll have a better deal with Europe” without actually checking with Europe first.

Let’s not make the same mistake.

When the Brexit vision says we’re going to be able to sell to Australia and the developing countries, have they considered that manufacturers in those countries might not want to opt for an expensive or inefficient supply chain over the one they have?

Is the average Australian manufacturer going to say “I’d like to increase my chance of downtown or spend money increasing my warehouse capacity because the UK voted to leave the EU”?

No.

(Trade, like trade agreements, always involve the wants and needs of more than one party)

Basically when we account for things like global trends and...you know... the laws of time and space, it all make up for a recipe of: Brexit is very bad for UK trade.

Specifically UK manufacturing that contributes to supply chains which, statistically, is probably quite a bit.

In short, global trends are, indeed, resulting in companies bringing their supply chains closer, and that means putting barriers between the UK and the EU is a bloody stupid thing to do.

And if you’re argument for Brexit is that we can drop tariffs, then you don’t understand the argument.

If your argument is that a company bringing its manufacturing closer has nothing to do with Brexit, then you don’t understand Brexit.

This has EVERYTHING to do with Brexit.

/End