News | Published June 03 2019

Robinson Brothers: UK manufacturing dip not surprising

For the first time in three years, UK manufacturing output declined last month, as stockpiling slowed down in anticipation of Brexit.

The last time the sector contracted was in July 2016, a month after the EU referendum.

By surveying a cross-section of British manufactuting firms, IHS Markit found that there was a reduction in the number of contracts being initiated.

The research also found that as the Brexit deadline approached, there was an increase of stockpiling in Q1.

However, the recent extension of Article 50's deadline to 31 October meant that stockpiling slowed down, resulting in an overall shrinkage of production among UK manufacturers.

IHS Markit said that trends in international trade also played a role, adding that many clients based in the EU "have shifted supply chains away from the UK."

Not all companies were surprised by this. Adrian Hanrahan, the managing director of Robinson Brothers, one of the UK's largest chemical manufacturers, told us: "Our Q2 is showing signs of slowing down ... but I am not totally surprised with the current situation.

"We are monitoring the situation very closely given that we are a small family company, and we will be unwinding the excess raw materials stocks we had built up over the coming months.

"However, as the supply chain was filled to capacity for March 29th, this unwinding is taking longer than expected.

"I therefore expect to see our output continuing to drop as it did in May but then plateau as we enter the middle of the second half of 2019.

"Trade wars involving USA and China are a concern, but they may also give a company like ours opportunities because we have competitors in both markets.

"Overall we are not going to panic just yet, but we will remain vigilant."

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Authored by

Thomas Wilson
Political Editor
June 03 2019

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