Images talks to suppliers, decorators and trade associations to gauge the imprint industry’s reaction to the EU referendum result
Just as there are, to put it mildly, mixed feelings across the UK about the result of the EU referendum, those in the garment decoration sector have vastly differing perspectives too. Peter Keers, managing director of Scotcrest, stands out by virtue of being a Scottish leaver: “I was one of the 38% of Scotland that voted to leave. I knew that the economy would go down a bit, but I took the view it was a gamble worth taking to protect the UK from mass immigration. Both Europe and Great Britain needs each other for trade, for culture… they’ll find a way round it.” He hopes that suppliers will not put up prices unless the pound remains low for a substantial amount of time – he suggests six months – and that they bring the price back down as soon as it strengthens.
The plans for Scotcrest, a schoolwear specialist with five shops in Scotland, haven’t changed following Brexit, reports Peter. “The company’s doing well, we bought two businesses last year and we’re looking to expand. Nothing that’s changed with Brexit will change my plans going forward.”
Another vote for the leave campaign came from Peter Joyce, managing director of TOTShirts in London. Before the referendum he had told Images he was leaning towards staying in, although he wasn’t certain. “I went the other way in the end because I thought the bureaucracy and some of the conditions of staying in were anti-business,” he explains. “My view is that, although it’s all gone a bit pear-shaped at the moment with everyone panicking, supply and demand will win out.” He has, however, experienced a bit of a blow as he has yet to settle a bill for some machinery bought in euros from Austria a month ago. On the Monday after the referendum when we spoke, the drop in the pound saw its cost rise by £2,000.
Peter was in France watching the football at the Euros the weekend after the referendum. “People kept saying: ‘You must be very worried about the situation’ and I said ‘No, we’re celebrating because we’ve won!’ They were more worried about it than we were.” He’s optimistic about the future. “I think there will be a period of calming down and then the free market economy will pitch in and the people with the best supply at the right price will win the contract, doesn’t matter where you are. We buy American T-shirts that come from Bangladesh and Morocco, and Canadian T-shirts. And Continental shirts are manufactured in Turkey – none of these people are in the EU so we’ll be buying with similar sort of deals to what we had. People will find solutions, that’s what business does.”
Statement from Matt Franks, chairman of the British Promotional Merchandise Association (BPMA)
“The short term impact will be similar to the early stages of recession, more aligned with general economic uncertainty than with market regulations or trading restrictions.
“Having recently recovered from a deep recession though, companies will be more aware of the steps they need to take. This should allow organisations to handle any potential downturn in business more calmly than six years ago, when panic decisions increased uncertainty and worsened the situation.
“We will, of course, engage with other trade bodies both in the UK, the EU and the rest of the world to ensure the UK promotional merchandise sector is seen to be open for business and keen to trade across borders. We also need to ensure our members’ voices are heard in upcoming negotiations as the UK repositions itself to trade with overseas markets.”
Luke Hodson, co-founder of Awesome Merchandise in Leeds, voted to remain in the EU. “Personally I think it’s a terrible thing. It’s inward-looking and, I believe, a thin margin to make seismic changes to our country both constitutionally and economically. Certainly for our business I think it’s an unnecessary distraction and disruption at a time where we have been expanding quickly.”
Awesome Merchandise has seen a lot of benefit from the union, with EU money helping to fund the business start-up units that the company was in for seven years, as well as six grants linked to employment and capital expenditure. Without those grants, the business would be in a different position today. “I certainly wouldn’t have employed so many people as quickly,” explains Luke. “When we’ve bought equipment it has been a question of needing to employ people as well. The grants allowed us a bit of breathing space. I’m sure we still would have grown without them, but it helped us to move forward in a bit more positive and quick manner.”
With employees from all over Europe as well as many from the UK, Luke believes that diversity in the workplace makes for a much better and more productive environment.
Awesome offers free shipping to Europe, which he hopes to be able to maintain post whatever deal is decided, although he points out that if the company starts facing charges of £25 a pop to every European country (goods he ships to Norway and Switzerland usually have a customs charge of £25-50), this may have to be reviewed. “I’m trying not to be too negative,” he says, “It’s just I think it’s a bit stupid and unnecessary.”
Prama Bhardwaj, founder and CEO of Mantis World, comments: “We can import duty-free garments from Bangladesh, from Pakistan and many other countries, because they are covered by EU trade treaties. The UK government would have to go back to every single supplier country, or indeed market, and renegotiate every single one of those trade agreements bilaterally. We’re talking about up to five to ten years of uncertainty.
“It’s like the mother of all hangovers; I would be very unsurprised to see some significant prices increases on the blank garments cost at least.”
Her advice to garment decorators at the moment is to buy stock before the prices go up, and to look at their cost base very carefully to see where cuts can be made. “On the plus side, what the weak pound will do is make UK production a little bit more competitive, so depending on what percentage of their total cost is the cost of the blank garment, versus what their internal costs are, they may find that for the next two years at least it may be in their interests to start looking at exporting.”
Statement from David Burgess, chair of the Schoolwear Association
“We think it is a little too soon to really comment on the impact for the industry. Certainly for this Back to School period everything is in place for a strong summer. Service levels are running well this far, and everything is going to plan so we don’t expect much to change in that period.
“Going forward, a lot will depend on how the pound performs against the dollar and we won’t know where it is going to settle for a little while yet. We are used to currency fluctuations and the industry will plan and cope accordingly.”
Over at Result, managing director David Sanders-Smith tells Images: “It’s too early to speculate on this. Obviously we are very disappointed for the destabilisation that this will cause our industry.” The company has sent out an email to all of its UK and EU customers and suppliers titled, ‘Brexit: Keep calm and carry on…’, promising that Result will stand by its customers and suppliers wherever they are, and that business will continue as usual.
Jim Nicol, managing director of TheMagicTouch, says he is waiting to see if the exchange rate, in particular, will settle. He isn’t making any decisions at the moment and is unwilling to speculate on possible price increases. He doesn’t think people realised the impact the vote would have: “It takes the wind out of your sails. It’s the worst setback we’ve ever had: as a business owner, it’s the worst thing that could have happened.”
Statement from Peter Kiddell, director of Fespa UK
“The keys to successful business are an ability to manage change and maintain difference to gain profitable sales. Brexit is change and it creates difference, so effective businesses will manage and prosper. The changes that will occur as we extract ourselves from the EU will be gradual and members will make adjustments to suit their needs.
“It is still very much wait and see and, as voiced by Corporal Jones, ‘Don’t panic!’”