How will Brexit affect the plumbing and heating industry?

Dennis Flower

Government ministers and business leaders are continuing to discuss the various developments that will result from the UK voting to leave the European Union (EU), with little firm detail emerging. 

But there are some pointers that are worth watching that have implications for heating and plumbing businesses.

How these impact will depend on the structure of each business, of course, although any movement on  equipment prices will be something that affects the sector on a fairly universal basis.

Adjustment to established supply chain methods

At first glance, it would appear that those suppliers with manufacturing capacity in the UK should be least affected and not reliant on any trade deals.

However, the majority of the large manufacturers supplying the heating and plumbing sector have foreign owners. Although they have dedicated UK facilities and workforces, these are essentially a division of their companies' overall operational capacity.

We can assume with some confidence that the UK market will continue to be an important one for boiler manufacturers all the time it accounts for well over a million new boilers every year.

Price of equipment and components

What remains to be seen is how will Brexit affect plumbing and heating business on prices of raw materials and equipment sourced from outside the UK.

This will also be a factor for manufacturers and distributors of pumps, pipes, fittings, valves, radiators and all the other components used by the plumbing and heating sector.

Depending on how Brexit develops, there is a real possibility that the 'made in Britain' label could take on significantly more relevance, especially if it favourably impacts on prices.

Levels of customer support

The other side of the coin, of course, is that suppliers may prefer to keep their manufacturing capacity within the EU.

With the recent announcement that the major banks are considering downsizing their UK operations following the Brexit vote, with other sectors also considering the future of their UK facilities, this could see heating and plumbing equipment manufacturers deciding to upgrade their EU operations to supply the UK market.

Changes to manufacturing operations should not impact on heating and plumbing businesses too drastically, but the situation needs to be monitored and will no doubt be an area of focus within organisations such as the Heating and Hotwater Industry Council (HHIC) www.centralheating.co.uk.

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Ease of recruiting overseas workers Effects of UK economy rise or fall on local companies

Another ongoing area of concern is how Brexit will affect the movement of workers. Although this will be of little concern to the smaller 'father and son' type businesses, larger companies have found it easier to recruit skilled heating and plumbing engineers from areas such as Eastern Europe in recent years.

Those companies finding it difficult to recruit skilled labour will have another next option next year, however, with the introduction of the Apprenticeship Levy (https://www.gov.uk/government/publications/apprenticeship-funding-from-may-2017), which will provide support for smaller companies taking on trainees. With Brexit unlikely to be completed for some time, heating and plumbing businesses have sufficient time to engage with the levy to ensure they have workers in place with the necessary skill levels.

Looking further ahead, the UK government will have to decide on how closely it aligns legislation to the EU market.

It would seem unwise to deviate too far from this in the short term, as the UK heating and plumbing sector has invested considerably amounts of time and money to comply, but the situation should be closely monitored to identify any significant further developments.

Although there is little confirmed detail to consider at present, the current pointers indicate that the UK's heating and plumbing sector needs to examine how Brexit will affect heating and plumbing business on prices, equipment supply and labour initially, while continuing to monitor further developments in the future.

POTENTIAL BREXIT HEATING AND PLUMBING IMPACT POINTS

  • Price of equipment and components
  • Adjustment to established supply chain methods
  • Levels of customer support

  • Ease of recruiting overseas workersEffects of UK economy rise or fall on local companies

 

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